x
Celanese_logo Investor Relations
x
Back to news

Celanese Corporation Reports Full Year 2017 and Fourth Quarter Earnings; Increases 2018 Outlook

Thu, January 25 2018

DALLAS--(BUSINESS WIRE)-- Celanese Corporation (NYSE: CE), a global technology and specialty materials company, today reported GAAP diluted earnings per share of $6.19 and adjusted earnings per share of $7.51 for 2017. The company also reported fourth quarter GAAP diluted earnings per share of $1.50 and adjusted earnings per share of $1.98. Financial performance for the year was driven by strong contributions from Advanced Engineered Materials (AEM) and the Acetyl Chain which more than offset the decline in Consumer Specialties. Advanced Engineered Materials grew through the success of the opportunity pipeline, increased penetration into China, integration of the SO.F.TER. and Nilit acquisitions, and better performance in joint ventures. Recently, Celanese announced an agreement to acquire Omni Plastics, a custom compounder, which will expand its specialty polymer portfolio and broaden its exposure to new end markets. The Acetyl Chain progressively strengthened through the year as the business model advanced and overcame headwinds from Hurricane Harvey and a major planned turnaround.

Fourth Quarter and Full Year 2017 Highlights:

       
Three Months Ended Year Ended
December 31, December 31,
  2017         2016     2017         2016  
(unaudited)
(In $ millions, except per share data)
Net Sales
Advanced Engineered Materials 550 364 2,096 1,444
Consumer Specialties 187 225 785 929
Eliminations   (2 )   —     (2 )   —  
Total Materials Solutions   735     589     2,879     2,373  
Industrial Specialties 252 219 1,023 979
Acetyl Intermediates 717 597 2,669 2,441
Eliminations   (81 )   (67 )   (321 )   (288 )
Total Acetyl Chain   888     749     3,371     3,132  
Other Activities — — — —
Intersegment Eliminations   (30 )   (27 )   (110 )   (116 )
Total   1,593     1,311     6,140     5,389  
 
 
Three Months Ended Year Ended
December 31, December 31,
  2017     2016     2017     2016  
(unaudited)
(In $ millions, except per share data)
Operating Profit (Loss)
Advanced Engineered Materials 91 87 383 350
Consumer Specialties   48     76     218     302  
Total Materials Solutions   139     163     601     652  
Industrial Specialties 16 20 87 105
Acetyl Intermediates 160 66 424 340
Eliminations   —     —     —     1  
Total Acetyl Chain   176     86     511     446  
Other Activities   (98 )   (132 )   (211 )   (205 )
Total   217     117     901     893  
Net earnings (loss) 204 161 849 906
 
 
Adjusted EBIT(1)(2)
Advanced Engineered Materials 135 121 567 479
Consumer Specialties   75     106     333     418  
Total Materials Solutions   210     227     900     897  
Industrial Specialties 16 18 90 106
Acetyl Intermediates 162 68 485 347
Eliminations   —     —     —     1  
Total Acetyl Chain   178     86     575     454  
Other Activities   (36 )   (24 )   (119 )   (73 )
Total   352     289     1,356     1,278  
 
Equity Earnings, Cost-Dividend Income, Other Income (Expense)
Advanced Engineered Materials 43 31 168 122
Consumer Specialties   26     27     110     110  
Total Materials Solutions   69     58     278     232  
 
Operating EBITDA(1) 431 360 1,659 1,566
Diluted EPS - continuing operations $ 1.50 $ 1.12 $ 6.19 $ 6.19
Diluted EPS - total $ 1.49 $ 1.12 $ 6.09 $ 6.18
Adjusted EPS(1) $ 1.98 $ 1.52 $ 7.51 $ 6.61
 
Net cash provided by (used in) investing activities (92 ) (247 ) (549 ) (439 )
Net cash provided by (used in) financing activities 145 (292 ) (351 ) (759 )
Net cash provided by (used in) operating activities 58 (47 ) 803 893
Free cash flow(1) (38 ) (116 ) 509 623
______________________________
(1)   See "Non-US GAAP Financial Measures" below.
(2) The company's discussion of adjusted earnings includes use of terms such as "segment income" and "core income". Those non-GAAP terms are defined below and reconciled in our Non-US GAAP Financial Measures and Supplemental Information document below.
 
 

Full Year Business Segment Overview

Materials Solutions

Materials Solutions' net sales grew 21 percent over 2016 to $2.9 billion as growth in AEM outweighed the step-down in Consumer Specialties, mainly tow. GAAP operating profit was $601 million and core income was $900 million for the year. Advanced Engineered Materials outperformed prior years driven by growth in its base business, new acquisitions, and higher affiliate earnings. Operating profit of $383 million was the second highest ever and segment income of $567 million was an all time high. Volume in AEM increased year over year with advancements in the opportunity pipeline, the acquisition of SO.F.TER. and Nilit, and growth across regions, particularly in Asia. For the year, 2,232 new projects were commercialized. This 61 percent increase in project commercializations from 2016 underscores AEM's ability to address demand from customers for a solutions-based partnership via the opportunity pipeline model. In just a few years, the business has grown project completions multi-fold by mapping customer options to polymer solutions, organizing projects into programs, prioritizing internal resources, and translating that success across end-uses.

Consumer Specialties' GAAP operating profit was $218 million and segment income was $333 million. In line with expectations, tow price and volume stepped down in 2017 from 2016 due to depressed tow industry utilization rates and offset gains from productivity initiatives.

Affiliate earnings in Materials Solutions was $278 million and the increase over prior year was driven by higher MTBE pricing in Ibn Sina along with better results at the polymer joint ventures. Earnings from acetate tow joint ventures in China were consistent year over year.

Acetyl Chain

The Acetyl Chain recorded the third highest GAAP operating profit of $511 million and second highest ever core income of $575 million. These results were achieved despite constrained volumes in the second quarter from a significant planned turnaround in Clear Lake, Texas and disruption in the US Gulf Coast from Hurricane Harvey in the third quarter. Operating profit margin was 15.2 percent, a 50 basis points improvement over the previous high in 2014, and core income margin was 17.1 percent, a 260 basis point expansion from the prior high in 2016. The business identified and executed on multiple opportunities to drive margin enhancing growth, particularly in acetic acid in Asia, and overcame raw material cost inflation, specifically methanol. The robust results for the year benefited from the business's ability to manage demand and raw material volatility with unique assets and a global supply chain.

Recent Highlights

  • Demonstrated the Acetyl Chain's capabilities to address a dynamic market with multiple supply dislocations, particularly in the second half of 2017.
  • Completed 587 projects in the fourth quarter, the highest ever in AEM. Total new project commercializations in 2017 were 2,232, a 61 percent increase year over year.
  • Signed a definitive agreement to acquire Omni Plastics and its subsidiaries, including the distributor Resinal de Mexico. Omni Plastics specializes in custom compounding of various engineered thermoplastics with a compounding facility in Evansville, Indiana, and additional offices in Mexico City.
  • Received regulatory approvals for the acetate tow joint venture in Mexico, Turkey, Russia, and China, four out of six jurisdictions requiring approval. Confirmed receipt of a statement of objections from the European Commission as part of the Phase II review process. Completed major carve-out milestone to create a new legal entity and operating structure for the cellulose derivatives business, in preparation for contribution to the JV upon close.
  • Declared the polyacetal facility at the Ibn Sina joint venture commercially operational as of the beginning of the fourth quarter. Upon successful startup of the polyacetal facility, Celanese’s economic interest in Ibn Sina increased from 25 percent to 32.5 percent.
  • Completed a public offering of €300 million aggregate principal amount of 1.25% Senior Notes due 2025, using net proceeds primarily for a voluntary contribution to fully fund qualified U.S. pension plans.

Fourth Quarter Business Segment Overview

Materials Solutions

Materials Solutions reported record net sales of $735 million in the fourth quarter, a 25 percent improvement over 2016. Growth in AEM from new project introductions and acquisitions partially offset the decline in Consumer Specialties from tow. AEM delivered the second highest fourth quarter GAAP operating profit of $91 million and the highest ever fourth quarter segment income of $135 million. The strong fourth quarter included a concerted effort to dampen seasonality through diversifying geographies and applications by focusing on solutions-based customer interaction. The opportunity pipeline expanded by 587 projects in the quarter continuing the traction with customers in identifying possibilities for value enhancement. Operating profit margin of 16.5 percent and segment income margin of 24.5 percent were lower year over year with new acquisitions contributing to margin dilution and temporarily higher plant costs in the quarter. Margins are expected to recover as synergies from recent acquisitions are realized in 2018 and beyond. Contributions from higher volumes and affiliate earnings more than offset higher raw material and plant costs.

Acetate tow price and volume declined in the fourth quarter year over year due to lower tow industry utilization which was in line with expectations. Sequentially, results were largely consistent.

Acetyl Chain

The Acetyl Chain's net sales for the quarter were $888 million, 19 percent higher than the same quarter last year, driven by increases in price. GAAP operating profit of $176 million was the third highest ever and core income of $178 million was a fourth quarter record, a 107 percent improvement over the same quarter in 2016. The Acetyl Chain was particularly well-positioned and the flexibility in its global supply chain enabled it to respond quickly to changes in instantaneous utilization rates, particularly in China. GAAP operating margin of 19.8 percent and core income margin of 20.0 percent were both records. The business used its model and better market dynamics to increase prices, mainly in acetic acid, in excess of rising raw material input costs, mainly methanol and ethylene.

Cash Flow and Tax

Operating cash flow was $803 million for the year. Free cash flow was $825 million before taking into account the $316 million voluntary contribution to fully fund qualified U.S. pension plans. Capex for the year was $267 million, including $140 million of growth investment.

$741 million of cash was returned to shareholders, repurchasing 5.4 million shares for $500 million and distributing $241 million in dividends for the year. As of December 31, 2017, $1.5 billion remains under the current share repurchase authorization.

As a result of the recent Tax Cuts and Jobs Act of 2017, a net tax expense of $90 million was recognized in the fourth quarter of 2017, with tax on deemed repatriation of accumulated foreign earnings partially offset by a reduction of deferred tax liabilities. A net tax benefit of $76 million was recognized related to foreign tax credits generated from reorganization of the acetate tow business in preparation for the acetate tow joint venture. These amounts were excluded from the adjusted rate. No material cash impact is expected from the deemed repatriation due to existing foreign tax credit carryforwards.

Outlook

"We set out in 2017 to further strengthen our business models in both AEM and the Acetyl Chain while addressing the headwinds in Consumer Specialties. In AEM, we made progress on integrating two high value-add acquisitions. Organic growth was further enhanced by extending the opportunity pipeline to the newly integrated polymers, creating current and future earnings uplift. In the Acetyl Chain, the business planned efficiently to address the scheduled turnaround in Clear Lake and also responded swiftly to address industry disruptions by leveraging its global supply chain. As a result, in 2017 we reported the second highest operating profit of $901 million and record adjusted EBIT of $1.4 billion. In 2018, we expect the AEM pipeline model to evolve to a higher level of project volume and the Acetyl Chain to carry forward the momentum from its improved model. Tow earnings should be relatively flat. An early read on the recent tax reform indicates a 2 percent lower adjusted tax rate of 14 percent for Celanese in 2018. Taking all these drivers into consideration, current estimations for 2018 put growth of adjusted earnings per share in the 10-14 percent range, with more of the growth in the first half of the year," said Mark Rohr, chairman and chief executive officer.

Regarding a forward view on a US GAAP basis, we are unable to reconcile forecasted adjusted earnings per share growth to US GAAP diluted earnings per share without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, is not practical. The Company's earnings presentation and prepared remarks related to the fourth quarter and full year results will be posted on its website at www.celanese.com under Investor Relations/Events and Presentations after market close on January 25, 2018. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our website and available at the link below. See "Non-GAAP Financial Measures" below.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Our two complementary business cores, Acetyl Chain and Materials Solutions, use the full breadth of Celanese's global chemistry, technology and business expertise to create value for our customers and the corporation. As we partner with our customers to solve their most critical business needs, we strive to make a positive impact on our communities and the world through The Celanese Foundation. Based in Dallas, Celanese employs approximately 7,600 employees worldwide and had 2017 net sales of $6.1 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com or our blog at www.celaneseblog.com.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the company's plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. All forward-looking statements are based upon current expectations and beliefs and various assumptions including the announced stock purchase transaction. There can be no assurance that the company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements contained in this release, including with respect to the acquisition. These risks and uncertainties include, among other things: changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; the length and depth of product and industry business cycles, particularly in the automotive, electrical, textiles, electronics and construction industries; changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources; the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases; the ability to maintain plant utilization rates and to implement planned capacity additions and expansions; the ability to reduce or maintain their current levels of production costs and to improve productivity by implementing technological improvements to existing plants; increased price competition and the introduction of competing products by other companies; market acceptance of our technology; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the company; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather or natural disasters; potential liability for remedial actions and increased costs under existing or future environmental regulations, including those relating to climate change; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies of governments or other governmental activities in the countries in which we operate; changes in currency exchange rates and interest rates; our level of indebtedness, which could diminish our ability to raise additional capital to fund operations or limit our ability to react to changes in the economy or the chemicals industry; and various other factors discussed from time to time in the company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Non-GAAP Financial Measures

Presentation

This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and the Consumer Specialties segment.

Use of Non-US GAAP Financial Information

This release uses the following Non-US GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, adjusted earnings per share and free cash flow. These measures are not recognized in accordance with US GAAP and should not be viewed as an alternative to US GAAP measures of performance or liquidity. The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by (used in) operations.

Definitions of Non-US GAAP Financial Measures

  • Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8 of our Non-US GAAP Financial Measures and Supplemental Information document). We may provide guidance on adjusted EBIT but are unable to reconcile forecasted adjusted EBIT to a US GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales.
  • Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT by core (i.e. Acetyl Chain and/or Materials Solutions) may also be referred to by management as core income. Adjusted EBIT margin by business segment may also be referred to by management as segment income margin. Adjusted EBIT margin by core may also be referred to by management as core income margin.
  • Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization.
  • Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We may provide guidance on adjusted earnings per share but are unable to reconcile forecasted adjusted earnings per share to a US GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical.

    Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes, and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a of our Non-US GAAP Financial Measures and Supplemental Information document summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
  • Free cash flow is a liquidity measure used by the Company and is defined by the Company as cash flow from operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway Methanol LLC ("Fairway").

Reconciliation of Non-US GAAP Financial Measures

Reconciliations of the Non-US GAAP financial measures used in this press release to the comparable US GAAP financial measure, together with information about the purposes and uses of non-US GAAP financial measures, are included in our Non-US GAAP Financial Measures and Supplemental Information document filed as an exhibit to our Current Report on Form 8-K filed with the SEC on or about January 25, 2018 and also available on our website at www.celanese.com under Financial Information, Non-GAAP Financial Measures, or at this link: http://investors.celanese.com/interactive/lookandfeel/4103411/Non-GAAP.PDF.

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Supplemental Information

Additional information about our prior period performance is included in our Quarterly Reports on Form 10-Q and in our Non-US GAAP Financial Measures and Supplemental Information document.

 
 

Consolidated Statements of Operations - Unaudited

 
    Three Months Ended
December 31,
2017     2016

(In $ millions, except share and per
share data)

Net sales 1,593 1,311
Cost of sales (1,182 ) (989 )
Gross profit 411 322
Selling, general and administrative expenses (165 ) (184 )
Amortization of intangible assets (6 ) (2 )
Research and development expenses (19 ) (20 )
Other (charges) gains, net (2 ) 1
Foreign exchange gain (loss), net (1 ) (2 )

Gain (loss) on disposition of businesses and assets, net

(1 ) 2  
Operating profit (loss) 217 117
Equity in net earnings (loss) of affiliates 48 41
Interest expense (31 ) (29 )
Refinancing expense — —
Interest income — 1
Dividend income - cost investments 26 26
Other income (expense), net 5   —  
Earnings (loss) from continuing operations before tax 265 156
Income tax (provision) benefit (60 ) 5  
Earnings (loss) from continuing operations 205   161  
Earnings (loss) from operation of discontinued operations (2 ) —
Gain (loss) on disposition of discontinued operations — —
Income tax (provision) benefit from discontinued operations 1   —  
Earnings (loss) from discontinued operations (1 ) —  
Net earnings (loss) 204 161
Net (earnings) loss attributable to noncontrolling interests (1 ) (1 )
Net earnings (loss) attributable to Celanese Corporation 203   160  
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations 204 160
Earnings (loss) from discontinued operations (1 ) —  
Net earnings (loss) 203   160  
Earnings (loss) per common share - basic
Continuing operations 1.50 1.13
Discontinued operations (0.01 ) —  
Net earnings (loss) - basic 1.49   1.13  
Earnings (loss) per common share - diluted
Continuing operations 1.50 1.12
Discontinued operations (0.01 ) —  
Net earnings (loss) - diluted 1.49   1.12  
Weighted average shares (in millions)
Basic 135.8 141.9
Diluted 136.3 142.6
 
 

Consolidated Statements of Operations - Unaudited

 
    Year Ended December 31,
2017     2016

(In $ millions, except share and per
share data)

Net sales 6,140 5,389
Cost of sales (4,625 ) (3,984 )
Gross profit 1,515 1,405
Selling, general and administrative expenses (456 ) (416 )
Amortization of intangible assets (20 ) (9 )
Research and development expenses (72 ) (78 )
Other (charges) gains, net (60 ) (11 )
Foreign exchange gain (loss), net (1 ) (1 )

Gain (loss) on disposition of businesses and assets, net

(5 ) 3  
Operating profit (loss) 901 893
Equity in net earnings (loss) of affiliates 183 155
Interest expense (122 ) (120 )
Refinancing expense — (6 )
Interest income 2 2
Dividend income - cost investments 108 108
Other income (expense), net 3   (2 )
Earnings (loss) from continuing operations before tax 1,075 1,030
Income tax (provision) benefit (213 ) (122 )
Earnings (loss) from continuing operations 862   908  
Earnings (loss) from operation of discontinued operations (16 ) (3 )
Gain (loss) on disposition of discontinued operations — —
Income tax (provision) benefit from discontinued operations 3   1  
Earnings (loss) from discontinued operations (13 ) (2 )
Net earnings (loss) 849 906
Net (earnings) loss attributable to noncontrolling interests (6 ) (6 )
Net earnings (loss) attributable to Celanese Corporation 843   900  
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations 856 902
Earnings (loss) from discontinued operations (13 ) (2 )
Net earnings (loss) 843   900  
Earnings (loss) per common share - basic
Continuing operations 6.21 6.22
Discontinued operations (0.10 ) (0.01 )
Net earnings (loss) - basic 6.11   6.21  
Earnings (loss) per common share - diluted
Continuing operations 6.19 6.19
Discontinued operations (0.10 ) (0.01 )
Net earnings (loss) - diluted 6.09   6.18  
Weighted average shares (in millions)
Basic 137.9 144.9
Diluted 138.3 145.7
 
 

Consolidated Balance Sheets - Unaudited

 
    As of     As of
December 31, December 31,
2017 2016
(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents 576 638
Trade receivables - third party and affiliates, net 986 801
Non-trade receivables, net 244 223
Inventories 900 720
Marketable securities, at fair value 32 30
Other assets 54   60  
Total current assets 2,792   2,472  
Investments in affiliates 976 852
Property, plant and equipment, net 3,762 3,577
Deferred income taxes 366 159
Other assets 338 307
Goodwill 1,003 796
Intangible assets, net 301   194  
Total assets 9,538   8,357  
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current installments of long-term debt - third party and affiliates 326 118
Trade payables - third party and affiliates 807 625
Other liabilities 354 322
Income taxes payable 72   12  
Total current liabilities 1,559   1,077  
Long-term debt 3,315 2,890
Deferred income taxes 211 130
Uncertain tax positions 156 131
Benefit obligations 585 893
Other liabilities 413 215
Commitments and Contingencies
Stockholders' Equity
Preferred stock — —
Common stock — —
Treasury stock, at cost (2,031 ) (1,531 )
Additional paid-in capital 175 157
Retained earnings 4,920 4,320
Accumulated other comprehensive income (loss), net (177 ) (358 )
Total Celanese Corporation stockholders' equity 2,887 2,588
Noncontrolling interests 412   433  
Total equity 3,299   3,021  
Total liabilities and equity 9,538   8,357  
 
 
 

Non-US GAAP Financial Measures and Supplemental Information

January 25, 2018

In this document, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a consolidated basis.

Purpose

The purpose of this document is to provide information of interest to investors, analysts and other parties including supplemental financial information and reconciliations and other information concerning our use of non-US GAAP financial measures. This document is updated quarterly.

Presentation

This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and the Consumer Specialties segment.

Use of Non-US GAAP Financial Measures

From time to time, management may publicly disclose certain numerical "non-GAAP financial measures" in the course of our earnings releases, financial presentations, earnings conference calls, investor and analyst meetings and otherwise. For these purposes, the Securities and Exchange Commission ("SEC") defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with US GAAP, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable US GAAP measure so calculated and presented. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States.

Non-GAAP financial measures disclosed by management are provided as additional information to investors, analysts and other parties because the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other US GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Investor Relations/Financial Information/SEC Filings page of our website, www.celanese.com. The definition and method of calculation of the non-GAAP financial measures used herein may be different from other companies' methods for calculating measures with the same or similar titles. Investors, analysts and other parties should understand how another company calculates such non-GAAP financial measures before comparing the other company's non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.

Pursuant to the requirements of SEC Regulation G, whenever we refer to a non-GAAP financial measure, we will also present in this document, in the presentation itself or on a Form 8-K in connection with the presentation on the Investor Relations/Financial Information/Non-GAAP Financial Measures page of our website, www.celanese.com, to the extent practicable, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

This document includes definitions and reconciliations of non-GAAP financial measures used from time to time by the Company.

Specific Measures Used

This document provides information about the following non-GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, operating profit (loss) attributable to Celanese Corporation, adjusted earnings per share, net debt, free cash flow and return on invested capital (adjusted). The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin and operating EBITDA margin is operating margin; for operating profit (loss) attributable to Celanese Corporation is operating profit (loss); for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; for net debt is total debt; for free cash flow is net cash provided by (used in) operations; and for return on invested capital (adjusted) is net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity.

Definitions

  • Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8). We believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of unusual, non-operational or restructuring-related activities that affect comparability. Our management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial and operating results and as a performance metric in the Company's incentive compensation plan. We may provide guidance on adjusted EBIT but are unable to reconcile forecasted adjusted EBIT to a US GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses and limitations as Adjusted EBIT.
  • Adjusted EBIT by core (i.e. Acetyl Chain and/or Materials Solutions) may also be referred to by management as core income. Adjusted EBIT margin by core may also be referred to by management as core income margin. Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT margin by business segment may also be referred to by management as segment income margin.
  • Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We believe that Operating EBITDA provides transparent and useful information to investors, analysts and other parties in evaluating our operating performance relative to our peer companies. Operating EBITDA margin is defined by the Company as Operating EBITDA divided by net sales. Operating EBITDA margin has the same uses and limitations as Operating EBITDA.
  • Operating profit (loss) attributable to Celanese Corporation is defined by the Company as operating profit (loss), less earnings (loss) attributable to noncontrolling interests ("NCI"). We believe that operating profit (loss) attributable to Celanese Corporation provides transparent and useful information to management, investors, analysts and other parties in evaluating our core operational performance. Operating margin attributable to Celanese Corporation is defined by the Company as operating profit (loss) attributable to Celanese Corporation divided by net sales. Operating margin attributable to Celanese Corporation has the same uses and limitations as Operating profit (loss) attributable to Celanese Corporation.
  • Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We believe that adjusted earnings per share provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of the above stated items that affect comparability and as a performance metric in the Company's incentive compensation plan. We may provide guidance on adjusted earnings per share but are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains and losses, which may be significant, is not practical.

    Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
  • Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway Methanol LLC ("Fairway"). We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. Although we use free cash flow as a measure to assess the liquidity generated by our business, the use of free cash flow has important limitations, including that free cash flow does not reflect the cash requirements necessary to service our indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding obligations.
  • Net debt is defined by the Company as total debt less cash and cash equivalents. We believe that net debt provides useful information to management, investors, analysts and other parties in evaluating changes to the Company's capital structure and credit quality assessment.
  • Return on invested capital (adjusted) is defined by the Company as adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity. We believe that return on invested capital (adjusted) provides useful information to management, investors, analysts and other parties in order to assess our income generation from the point of view of our stockholders and creditors who provide us with capital in the form of equity and debt and whether capital invested in the Company yields competitive returns. In addition, achievement of certain predetermined targets relating to return on invested capital (adjusted) is one of the factors we consider in determining the amount of performance-based compensation received by our management.

Supplemental Information

Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:

  • Net sales for Materials Solutions, the Acetyl Chain and each of our business segments and the percentage increase or decrease in net sales attributable to price, volume, currency and other factors for Materials Solutions, the Acetyl Chain and each of our business segments.
  • Cash dividends received from our equity and cost investments.
  • For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside stockholders' interests are shown as NCI. Beginning in 2014, this includes Fairway for which the Company's ownership percentage is 50%. Amounts referred to as "attributable to Celanese Corporation" are net of any applicable NCI.

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

 
 
Table 1
Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions)
Net earnings (loss) attributable to Celanese Corporation 843 203 226 231 183 900 160 262 221 257
(Earnings) loss from discontinued operations 13 1 4 8 — 2 — 3 — (1 )
Interest income (2 ) — (1 ) (1 ) — (2 ) (1 ) — — (1 )
Interest expense 122 31 32 30 29 120 29 28 30 33
Refinancing expense — — — — — 6 — 4 — 2
Income tax provision (benefit) 213 60 57 40 56 122 (5 ) 15 52 60

Certain Items attributable to Celanese Corporation (Table 8)

167   57 27   18   65 130   106   7 9 8  
Adjusted EBIT 1,356 352 345 326 333 1,278 289 319 312 358
Depreciation and amortization expense(1) 303   79 78   75   71 288   71   71 73 73  
Operating EBITDA 1,659   431 423   401   404 1,566   360   390 385 431  
 
 
2017 Q4 '17 Q3 '17 Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Advanced Engineered Materials — — — — — — — — — —
Consumer Specialties — — — — — 1 — 1 — —
Industrial Specialties 2 — 2 — — — — — — —
Acetyl Intermediates — — — — — — — — — —
Other Activities(2) —   — —   —   — 1   1   — — —  
Accelerated depreciation and amortization expense 2 — 2 — — 2 1 1 — —
Depreciation and amortization expense(1) 303   79 78   75   71 288   71   71 73 73  
Total depreciation and amortization expense 305   79 80   75   71 290   72   72 73 73  
______________________________
(1)   Excludes accelerated depreciation and amortization expense as detailed in the table above, which amounts are included in Certain Items above.
(2) Other Activities includes corporate Selling, general and administrative ("SG&A") expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
 
 

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited

 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions, except percentages)
Operating Profit (Loss) / Operating Margin                                        
Materials Solutions 601 20.9 % 139 18.9 % 150 20.5 % 146 20.6 % 166 23.5 % 652 27.5 % 163 27.7 % 161 27.3 % 162 27.0 % 166 27.9 %
Acetyl Chain(1) 511 15.2 % 176 19.8 % 148 17.1 % 135 16.3 % 52 6.5 % 446 14.2 % 86 11.5 % 108 14.2 % 107 13.7 % 145 17.3 %
Other Activities(2) (211 ) (98 ) (46 ) (41 ) (26 ) (205 ) (132 ) (23 ) (26 ) (24 )
Total 901   14.7 % 217   13.6 % 252   16.1 % 240   15.9 % 192   13.1 % 893   16.6 % 117   8.9 % 246   18.6 % 243   18.0 % 287   20.4 %
Less: Net Earnings (Loss) Attributable to NCI(1) 6   1   2   2   1   6   1   1   2   2  
Operating Profit (Loss) Attributable to Celanese Corporation 895   14.6 % 216   13.6 % 250   16.0 % 238   15.8 % 191   13.0 % 887   16.5 % 116   8.8 % 245   18.5 % 241   17.8 % 285   20.3 %
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation
Advanced Engineered Materials 383 18.3 % 91 16.5 % 97 17.9 % 97 18.8 % 98 20.1 % 350 24.2 % 87 23.9 % 93 25.5 % 82 22.5 % 88 25.1 %
Consumer Specialties 218   27.8 % 48   25.7 % 53   28.3 % 49   25.4 % 68   31.2 % 302   32.5 % 76   33.8 % 68   30.2 % 80   34.0 % 78   32.0 %
Total Materials Solutions 601   20.9 % 139   18.9 % 150   20.5 % 146   20.6 % 166   23.5 % 652   27.5 % 163   27.7 % 161   27.3 % 162   27.0 % 166   27.9 %
Industrial Specialties 87 8.5 % 16 6.3 % 20 7.6 % 26 9.9 % 25 10.2 % 105 10.7 % 20 9.1 % 25 10.2 % 29 11.1 % 31 12.3 %
Acetyl Intermediates(1) 418 15.7 % 159 22.2 % 126 18.4 % 107 16.5 % 26 4.2 % 334 13.7 % 65 10.9 % 82 13.9 % 75 12.7 % 112 16.9 %
Eliminations —   —   —   —   —   1   —   —   1   —  
Total Acetyl Chain 505   15.0 % 175   19.7 % 146   16.9 % 133   16.1 % 51   6.4 % 440   14.0 % 85   11.3 % 107   14.0 % 105   13.5 % 143   17.0 %
Other Activities(2) (211 ) (98 ) (46 ) (41 ) (26 ) (205 ) (132 ) (23 ) (26 ) (24 )
Total 895   14.6 % 216   13.6 % 250   16.0 % 238   15.8 % 191   13.0 % 887   16.5 % 116   8.8 % 245   18.5 % 241   17.8 % 285   20.3 %
Equity Earnings, Cost-Dividend Income, Other Income (Expense) Attributable to Celanese Corporation
Advanced Engineered Materials 168 43 45 38 42 122 31 33 27 31
Consumer Specialties 110   26   26   28   30   110   27   27   28   28  
Total Materials Solutions 278   69   71   66   72   232   58   60   55   59  
Industrial Specialties — — — — — — — — — —
Acetyl Intermediates 6   2   1   2   1   7   2   1   2   2  
Total Acetyl Chain 6   2   1   2   1   7   2   1   2   2  
Other Activities(2) 10   8   (4 ) 2   4   22   7   6   5   4  
Total 294   79   68   70   77   261   67   67   62   65  

Certain Items Attributable to Celanese Corporation (Table 8)

Advanced Engineered Materials 16 1 5 7 3 7 3 1 2 1
Consumer Specialties 5   1   —   2   2   6   3   3   —   —  
Total Materials Solutions 21   2   5   9   5   13   6   4   2   1  
Industrial Specialties 3 — 3 — — 1 (2 ) — 1 2
Acetyl Intermediates 61   1   7   (3 ) 56   6   1   1   3   1  
Total Acetyl Chain 64   1   10   (3 ) 56   7   (1 ) 1   4   3  
Other Activities(2) 82   54   12   12   4   110   101   2   3   4  
Total 167   57   27   18   65   130   106   7   9   8  
Adjusted EBIT / Adjusted EBIT Margin
Advanced Engineered Materials 567 27.1 % 135 24.5 % 147 27.1 % 142 27.5 % 143 29.4 % 479 33.2 % 121 33.2 % 127 34.8 % 111 30.4 % 120 34.3 %
Consumer Specialties 333   42.4 % 75   40.1 % 79   42.2 % 79   40.9 % 100   45.9 % 418   45.0 % 106   47.1 % 98   43.6 % 108   46.0 % 106   43.4 %
Total Materials Solutions 900   31.3 % 210   28.6 % 226   31.0 % 221   31.2 % 243   34.5 % 897   37.8 % 227   38.5 % 225   38.1 % 219   36.5 % 226   38.0 %
Industrial Specialties 90 8.8 % 16 6.3 % 23 8.7 % 26 9.9 % 25 10.2 % 106 10.8 % 18 8.2 % 25 10.2 % 30 11.5 % 33 13.0 %
Acetyl Intermediates 485 18.2 % 162 22.6 % 134 19.6 % 106 16.3 % 83 13.4 % 347 14.2 % 68 11.4 % 84 14.3 % 80 13.5 % 115 17.3 %
Eliminations —   —   —   —   —   1   —   —   1   —  
Total Acetyl Chain 575   17.1 % 178   20.0 % 157   18.2 % 132   16.0 % 108   13.6 % 454   14.5 % 86   11.5 % 109   14.3 % 111   14.2 % 148   17.6 %
Other Activities(2) (119 ) (36 ) (38 ) (27 ) (18 ) (73 ) (24 ) (15 ) (18 ) (16 )
Total 1,356   22.1 % 352   22.1 % 345   22.0 % 326   21.6 % 333   22.6 % 1,278   23.7 % 289   22.0 % 319   24.1 % 312   23.1 % 358   25.5 %
___________________________
(1)   Net earnings (loss) attributable to NCI is included within the Acetyl Intermediates segment.
(2) Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
 
 

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.)

 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions, except percentages)
Depreciation and Amortization Expense(1)                                        
Advanced Engineered Materials 108 29 29 26 24 92 21 22 25 24
Consumer Specialties 44   11   11   11   11   44   11   11   11   11  
Total Materials Solutions 152   40   40   37   35   136   32   33   36   35  
Industrial Specialties 36 10 8 10 8 34 9 9 8 8
Acetyl Intermediates 105   27   26   26   26   107   26   27   27   27  
Total Acetyl Chain 141   37   34   36   34   141   35   36   35   35  
Other Activities(2) 10   2   4   2   2   11   4   2   2   3  
Total 303   79   78   75   71   288   71   71   73   73  
Operating EBITDA / Operating EBITDA Margin
Advanced Engineered Materials 675 32.2 % 164 29.8 % 176 32.4 % 168 32.6 % 167 34.3 % 571 39.5 % 142 39.0 % 149 40.8 % 136 37.3 % 144 41.1 %
Consumer Specialties 377   48.0 % 86   46.0 % 90   48.1 % 90   46.6 % 111   50.9 % 462   49.7 % 117   52.0 % 109   48.4 % 119   50.6 % 117   48.0 %
Total Materials Solutions 1,052   36.5 % 250   34.0 % 266   36.4 % 258   36.4 % 278   39.4 % 1,033   43.5 % 259   44.0 % 258   43.7 % 255   42.5 % 261   43.9 %
Industrial Specialties 126 12.3 % 26 10.3 % 31 11.7 % 36 13.7 % 33 13.5 % 140 14.3 % 27 12.3 % 34 13.9 % 38 14.5 % 41 16.2 %
Acetyl Intermediates 590 22.1 % 189 26.4 % 160 23.4 % 132 20.3 % 109 17.6 % 454 18.6 % 94 15.7 % 111 18.8 % 107 18.1 % 142 21.4 %
Eliminations —   —   —   —   —   1   —   —   1   —  
Total Acetyl Chain 716   21.2 % 215   24.2 % 191   22.1 % 168   20.3 % 142   17.9 % 595   19.0 % 121   16.2 % 145   19.0 % 146   18.7 % 183   21.8 %
Other Activities(2) (109 ) (34 ) (34 ) (25 ) (16 ) (62 ) (20 ) (13 ) (16 ) (13 )
Total 1,659   27.0 % 431   27.1 % 423   27.0 % 401   26.6 % 404   27.5 % 1,566   29.1 % 360   27.5 % 390   29.5 % 385   28.5 % 431   30.7 %
___________________________
(1)   Excludes accelerated depreciation and amortization expense, which amounts are included in Certain Items above. See Table 1 for details.
(2) Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
 
 
Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
    per share     per share     per share     per share     per share     per share     per share     per share     per share     per share
(In $ millions, except per share data)
Earnings (loss) from continuing operations attributable to Celanese Corporation 856 6.19 204 1.50 230 1.68 239 1.72 183 1.30 902 6.19 160 1.12 265 1.83 221 1.50 256 1.73
Income tax provision (benefit) 213   60   57   40   56   122   (5 ) 15   52   60  
Earnings (loss) from continuing operations before tax 1,069 264 287 279 239 1,024 155 280 273 316

Certain Items attributable to Celanese Corporation (Table 8)

167 57 27 18 65 130 106 7 9 8
Refinancing and related expenses —   —   —   —   —   6   —   4   —   2  
Adjusted earnings (loss) from continuing operations before tax 1,236 321 314 297 304 1,160 261 291 282 326
Income tax (provision) benefit on adjusted earnings(1) (198 ) (51 ) (50 ) (48 ) (49 ) (197 ) (44 ) (49 ) (48 ) (55 )
Adjusted earnings (loss) from continuing operations(2) 1,038   7.51 270   1.98 264   1.93 249   1.79 255   1.81 963   6.61 217   1.52 242   1.67 234   1.59 271   1.83
 
Diluted shares (in millions)(3)
Weighted average shares outstanding 137.9 135.8 136.6 138.6 140.6 144.9 141.9 144.0 146.5 147.4
Incremental shares attributable to equity awards 0.4   0.5   0.4   0.4   0.4   0.8   0.7   0.6   0.6   0.7  
Total diluted shares 138.3   136.3   137.0   139.0   141.0   145.7   142.6   144.6   147.1   148.1  
 

______________________________

 

(1)

 

Calculated using adjusted effective tax rates (Table 3a) as follows:

 
2017 Q4 '17 Q3 '17 Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In percentages)
Adjusted effective tax rate 16 16 16 16 16 17 17 17 17 17
 
 

(2)

Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns.

 
   

Actual Plan
Asset Returns

   

Expected
Plan Asset
Returns

(In percentages)
Q4 '17 & 2017 10.5 7.3
Q4 '16 & 2016 6.9 7.3
 
 

(3)

Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive.

 
 
Table 3a
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
 
    Actual
2017     2016
(In percentages)
US GAAP effective tax rate 20 12
Discrete quarterly recognition of GAAP items(1) (11 ) 1
Tax impact of other charges and adjustments(2) 1 3
Recognition of foreign tax credits 20 —
Changes in valuation allowances, excluding impact of other charges and adjustments(3) (13 ) 2
Other(4) (1 ) (1 )
Adjusted tax rate 16   17  
______________________________
Note: As part of the year-end reconciliation, we updated the reconciliation of the GAAP effective tax rate for actual results.
(1)   Such as changes in tax laws (including US tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.
(2) Reflects the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes.
(3) Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.
(4) Tax impacts related to full-year forecasted tax opportunities and related costs.
 
 
Table 4
Net Sales by Segment - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions)
Advanced Engineered Materials 2,096 550 543 516 487 1,444 364 365 365 350
Consumer Specialties 785 187 187 193 218 929 225 225 235 244
Eliminations(1) (2 ) (2 ) —   —   —   —   —   —   —   —  
Total Materials Solutions 2,879   735   730   709   705   2,373   589   590   600   594  
Industrial Specialties 1,023 252 264 262 245 979 219 245 262 253
Acetyl Intermediates 2,669 717 684 649 619 2,441 597 589 592 663
Eliminations(1) (321 ) (81 ) (85 ) (85 ) (70 ) (288 ) (67 ) (71 ) (74 ) (76 )
Total Acetyl Chain 3,371   888   863   826   794   3,132   749   763   780   840  
Other Activities(2) — — — — — — — — — —
Intersegment eliminations(1) (110 ) (30 ) (27 ) (25 ) (28 ) (116 ) (27 ) (30 ) (29 ) (30 )
Net sales 6,140   1,593   1,566   1,510   1,471   5,389   1,311   1,323   1,351   1,404  
___________________________
 

(1)

Includes intersegment sales as follows:

2017 Q4 '17 Q3 '17 Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Consumer Specialties (2 ) (2 ) — — — — — — — —
Industrial Specialties (4 ) (1 ) (1 ) (1 ) (1 ) (3 ) (1 ) (1 ) (1 ) —
Acetyl Intermediates (427 ) (110 ) (111 ) (109 ) (97 ) (401 ) (93 ) (100 ) (102 ) (106 )
Intersegment eliminations (433 ) (113 ) (112 ) (110 ) (98 ) (404 ) (94 ) (101 ) (103 ) (106 )
 

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

 
 
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited
 
Three Months Ended December 31, 2017 Compared to Three Months Ended September 30, 2017
 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials (9 ) 10 — — 1
Consumer Specialties 2 (2 ) — — —
Total Materials Solutions (6 ) 7 — — 1
 
Industrial Specialties (6 ) 1 — — (5 )
Acetyl Intermediates (4 ) 9 — — 5
Total Acetyl Chain (5 ) 7 — 1 3
 
Total Company (5 ) 7 — — 2
 
 

Three Months Ended September 30, 2017 Compared to Three Months Ended June 30, 2017

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials — 2 3 — 5
Consumer Specialties (4 ) — 1 — (3 )
Total Materials Solutions (1 ) 1 3 — 3
 
Industrial Specialties (4 ) 2 3 — 1
Acetyl Intermediates 3 (1 ) 3 — 5
Total Acetyl Chain 1 — 3 — 4
 
Total Company — 1 3 — 4
 
 

Three Months Ended June 30, 2017 Compared to Three Months Ended March 31, 2017

 
    Volume     Price     Currency     Other     Total  
(In percentages)
Advanced Engineered Materials 4 — 2 — 6

(1)

Consumer Specialties (10 ) (2 ) — — (12 )
Total Materials Solutions — (1 ) 1 — —
 
Industrial Specialties 2 3 2 — 7
Acetyl Intermediates (1 ) 5 1 — 5
Total Acetyl Chain — 5 1 (2 ) 4
 
Total Company — 3 1 (1 ) 3
 
 

Three Months Ended March 31, 2017 Compared to Three Months Ended December 31, 2016

 
    Volume     Price     Currency     Other     Total  
(In percentages)
Advanced Engineered Materials 35 — (1 ) — 34

(2)

Consumer Specialties 3 (6 ) — — (3 )
Total Materials Solutions 22 (2 ) — — 20
 
Industrial Specialties 11 1 — — 12
Acetyl Intermediates (2 ) 6 — — 4
Total Acetyl Chain 2 5 (1 ) — 6
 
Total Company 11 2 (1 ) — 12
___________________________
(1)   2017 includes the effect of the acquisition of the nylon compounding division of Nilit Group.
(2) 2017 includes the effect of the SO.F.TER. S.r.l. acquisition.
 
 

Three Months Ended December 31, 2016 Compared to Three Months Ended September 30, 2016

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 1 — (1 ) — —
Consumer Specialties 2 (2 ) — — —
Total Materials Solutions 2 (1 ) (1 ) — —
 
Industrial Specialties (7 ) (2 ) (2 ) — (11 )
Acetyl Intermediates — 2 (1 ) — 1
Total Acetyl Chain (2 ) 1 (2 ) 1 (2 )
 
Total Company (1 ) 1 (1 ) — (1 )
 
 

Three Months Ended September 30, 2016 Compared to Three Months Ended June 30, 2016

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials (1 ) 1 — — —
Consumer Specialties (4 ) — — — (4 )
Total Materials Solutions (2 ) — — — (2 )
 
Industrial Specialties (6 ) — (1 ) — (7 )
Acetyl Intermediates — — — — —
Total Acetyl Chain (2 ) — (1 ) 1 (2 )
 
Total Company (2 ) — — — (2 )
 
 
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited (cont.)
 
Three Months Ended June 30, 2016 Compared to Three Months Ended March 31, 2016
 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 6 (2 ) 1 — 5
Consumer Specialties (3 ) (1 ) — — (4 )

Total Materials Solutions

2 (2 ) 1 — 1
 
Industrial Specialties 4 (1 ) 1 — 4
Acetyl Intermediates (11 ) — — — (11 )
Total Acetyl Chain (7 ) (1 ) 1 — (7 )
 
Total Company (4 ) (1 ) 1 — (4 )
 
 

Three Months Ended March 31, 2016 Compared to Three Months Ended December 31, 2015

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 12 — — — 12
Consumer Specialties 6 (7 ) — — (1 )
Total Materials Solutions 10 (3 ) — — 7
 
Industrial Specialties 9 (3 ) — — 6
Acetyl Intermediates 7 (4 ) — — 3
Total Acetyl Chain 8 (4 ) — (1 ) 3
 
Total Company 9 (4 ) — — 5
 
 
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited
 
Three Months Ended December 31, 2017 Compared to Three Months Ended December 31, 2016
 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 47 — 4 — 51
Consumer Specialties (11 ) (8 ) 1 1 (17 )
Total Materials Solutions 25 (3 ) 3 — 25
 
Industrial Specialties 3 7 5 — 15
Acetyl Intermediates (4 ) 21 3 — 20
Total Acetyl Chain (2 ) 19 4 (2 ) 19
 
Total Company 10 10 3 (1 ) 22
 
 

Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 49 (2 ) 2 — 49
Consumer Specialties (10 ) (8 ) 1 — (17 )
Total Materials Solutions 26 (4 ) 2 — 24
 
Industrial Specialties 2 4 2 — 8
Acetyl Intermediates (1 ) 16 1 — 16
Total Acetyl Chain — 13 2 (2 ) 13
 
Total Company 11 6 2 (1 ) 18
 
 

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 44 (2 ) (1 ) — 41
Consumer Specialties (9 ) (9 ) — — (18 )
Total Materials Solutions 23 (4 ) (1 ) — 18
 
Industrial Specialties (1 ) 3 (2 ) — —
Acetyl Intermediates (4 ) 14 (1 ) 1 10
Total Acetyl Chain (3 ) 12 (2 ) (1 ) 6
 
Total Company 8 5 (1 ) — 12
 
 

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 44 (3 ) (2 ) — 39
Consumer Specialties (2 ) (8 ) (1 ) — (11 )
Total Materials Solutions 25 (5 ) (1 ) — 19
 
Industrial Specialties 1 (2 ) (2 ) — (3 )
Acetyl Intermediates (12 ) 7 (2 ) — (7 )
Total Acetyl Chain (9 ) 5 (2 ) 1 (5 )
 
Total Company 5 1 (2 ) 1 5
 
 

Three Months Ended December 31, 2016 Compared to Three Months Ended December 31, 2015

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 20 (2) (1) — 17
Consumer Specialties 2 (11) — — (9)
Total Materials Solutions 12 (6) — — 6
 
Industrial Specialties (1) (6) (1) — (8)
Acetyl Intermediates (4) (2) (2) 1 (7)
Total Acetyl Chain (4) (3) (2) 1 (8)
 
Total Company 2 (4) (1) 1 (2)
 
 

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 16 (4 ) — — 12
Consumer Specialties (2 ) (7 ) — — (9 )
Total Materials Solutions 8 (5 ) — — 3
 
Industrial Specialties (1 ) (9 ) (1 ) — (11 )
Acetyl Intermediates (3 ) (11 ) — 1 (13 )
Total Acetyl Chain (3 ) (12 ) — 2 (13 )
 
Total Company 1 (9 ) — 2 (6 )
 
 
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited (cont.)
 
Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015
 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 8 (4 ) 1 — 5
Consumer Specialties 2 (8 ) — — (6 )
Total Materials Solutions 5 (5 ) 1 — 1
 
Industrial Specialties (1 ) (8 ) — — (9 )
Acetyl Intermediates (5 ) (13 ) — 2 (16 )
Total Acetyl Chain (4 ) (12 ) — 2 (14 )
 
Total Company — (10 ) — 1 (9 )
 
 

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 5 (2 ) (1 ) — 2
Consumer Specialties 17 (9 ) — — 8
Total Materials Solutions 9 (5 ) — — 4
 
Industrial Specialties — (9 ) (1 ) — (10 )
Acetyl Intermediates 6 (13 ) (2 ) 2 (7 )
Total Acetyl Chain 5 (13 ) (2 ) 1 (9 )
 
Total Company 7 (10 ) (2 ) 1 (4 )
 
 
Table 4c
Factors Affecting Segment Net Sales Year Over Year - Unaudited
 
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 46 (2 ) 1 — 45
Consumer Specialties (8 ) (8 ) — — (16 )
Total Materials Solutions 25 (4 ) — — 21
 
Industrial Specialties 1 3 — — 4
Acetyl Intermediates (5 ) 14 — — 9
Total Acetyl Chain (4 ) 12 — — 8
 
Total Company 9 5 — — 14
 
 

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

 
    Volume     Price     Currency     Other     Total
(In percentages)
Advanced Engineered Materials 11 (2 ) — — 9
Consumer Specialties 4 (8 ) — — (4 )
Total Materials Solutions 8 (5 ) — — 3
 
Industrial Specialties (1 ) (8 ) (1 ) — (10 )
Acetyl Intermediates (2 ) (10 ) (1 ) 2 (11 )
Total Acetyl Chain (2 ) (10 ) (1 ) 2 (11 )
 
Total Company 2 (8 ) (1 ) 2 (5 )
 
 
Table 5
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions)
Net cash provided by (used in) investing activities (549 ) (92 ) (68 ) (325 ) (64 ) (439 ) (247 ) (54 ) (63 ) (75 )
Net cash provided by (used in) financing activities (351 ) 145 (247 ) 21 (270 ) (759 ) (292 ) 265 (259 ) (473 )
 
Net cash provided by (used in) operating activities 803 58 255 298 192 893 (47 ) 304 349 287
Capital expenditures on property, plant and equipment (267 ) (87 ) (64 ) (54 ) (62 ) (246 ) (60 ) (58 ) (58 ) (70 )
Capital (distributions to) contributions from NCI (27 ) (9 ) (10 ) (4 ) (4 ) (24 ) (9 ) (9 ) (6 ) —  
Free cash flow(1)(2) 509   (38 ) 181   240   126   623   (116 ) 237   285   217  
 
Net sales 6,140   1,593   1,566   1,510   1,471   5,389   1,311   1,323   1,351   1,404  
 
Free cash flow as % of Net sales 8.3 % (2.4 )% 11.6 % 15.9 % 8.6 % 11.6 % (8.8 )% 17.9 % 21.1 % 15.5 %
______________________________
(1)   Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our joint venture, Fairway Methanol LLC ("Fairway").
(2) Excludes required debt service and capital lease payments of $27 million and $56 million for the years ending December 31, 2017 and 2016, respectively.
 
 
Table 6
Cash Dividends Received - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions)
Dividends from equity method investments

131

17

5 59 50 131 15 6 73 37
Dividends from cost method investments 108 26 24 29 29 108 26 26 29 27
Total

239

43

29 88 79 239 41 32 102 64
 
 
Table 7
Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited
 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16
(In $ millions)
Short-term borrowings and current installments of long-term debt - third party and affiliates 326 326 435 384 107 118 118 92 119 116
Long-term debt, net of unamortized deferred financing costs 3,315   3,315   2,954   2,931   2,851   2,890   2,890   2,923   2,464   2,487  
Total debt 3,641 3,641 3,389 3,315 2,958 3,008 3,008 3,015 2,583 2,603
Cash and cash equivalents (576 ) (576 ) (461 ) (511 ) (501 ) (638 ) (638 ) (1,252 ) (735 ) (716 )
Net debt 3,065   3,065   2,928   2,804   2,457   2,370   2,370   1,763   1,848   1,887  
 
 
Table 8
Certain Items - Unaudited
 

The following Certain Items attributable to Celanese Corporation are included in Net earnings (loss) and are adjustments to non-GAAP measures:

 
    2017     Q4 '17     Q3 '17     Q2 '17     Q1 '17     2016     Q4 '16     Q3 '16     Q2 '16     Q1 '16     Income Statement Classification
(In $ millions)
Employee termination benefits(1) 4 — — 2 2 11 — 3 3 5 Other charges (gains), net
Plant/office closures 58 2 2 (3 ) 57 4 1 2 — 1 Cost of sales / SG&A / R&D / Other charges (gains), net
Business optimization 4 — 4 — — 7 3 1 1 2 Cost of sales / SG&A
Asset impairments — — — — — 2 1 — 1 — Other charges (gains), net
(Gain) loss on disposition of business and assets, net 2 — — 2 — (4 ) (2 ) (2 ) — — (Gain) loss on disposition, net
Commercial disputes — — — — — (2 ) (2 ) — — — Other charges (gains), net
Write-off of other productive assets — — — — — 4 1 1 2 — Cost of sales / R&D
Employee benefit plan changes 1 — — 1 — 1 — — 1 — Cost of sales / SG&A / R&D
Actuarial (gain) loss on pension and postretirement plans 46 46 — — — 102 102 — — — Cost of sales / SG&A / R&D
Start-up costs — — — — — 2 — 1 1 — Cost of sales
Mergers and acquisitions 35 9 10 7 9 3 2 1 — — Cost of sales / SG&A / Other income (expense), net
InfraServ ownership change 8 — — 8 — — — — — — Other charges (gains), net / Equity in net earnings (loss) of affiliates
Impact from natural disasters(2) 11 — 11 — — — — — — — Cost of sales
Other (2 ) — — 1   (3 ) —   —   —   — — Equity in net earnings (loss) of affiliates
Certain Items attributable to Celanese Corporation 167   57 27 18   65   130   106   7   9 8
______________________________
(1)   Primarily associated with site shutdown costs.
(2) Primarily associated with Hurricane Harvey.
 
 
Table 9
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited
 
            2017             2016

(In $ millions,
except percentages)

(In $ millions,
except percentages)

Net earnings (loss) attributable to Celanese Corporation 843 900
 

Adjusted EBIT (Table 1)

 

1,356 1,278
Adjusted effective tax rate (Table 3a) 16 % 17 %
Adjusted EBIT tax effected 1,139 1,061
 
2017 2016 Average 2016 2015 Average
(In $ millions, except percentages)
Short-term borrowings and current installments of long-term debt - third parties and affiliates 326 118 222 118 513 316
Long-term debt, net of unamortized deferred financing costs 3,315 2,890 3,103 2,890 2,468 2,679
Celanese Corporation stockholders' equity 2,887 2,588 2,738   2,588 2,378 2,483  
Invested capital 6,063   5,478  
 
Return on invested capital (adjusted) 18.8 % 19.4 %
 
Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital 13.9 % 16.4 %

Celanese Corporation
Investor Relations
Surabhi Varshney, +1-972-443-3078
Surabhi.Varshney@celanese.com
or
Media - U.S.
Travis Jacobsen, +1-972-443-3750
William.Jacobsen@celanese.com
or
Media - Europe
Jens Kurth, +49(0)69 45009 1574
J.Kurth@celanese.com

Source: Celanese Corporation