Celanese Corporation Reports First Quarter 2020 Earnings; Highlights Resilient Cash Generation and Strong Balance Sheet

Mon, 27 Apr 2020

DALLAS--(BUSINESS WIRE)-- Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today reported first quarter GAAP diluted earnings per share of $1.88 and adjusted earnings per share of $2.29 on net sales of $1.5 billion. Despite the impact of coronavirus (COVID-19) on already weak demand levels in China that extended beyond Chinese New Year, the Company delivered sequential growth in operating profit and adjusted EBIT due to the resiliency of the Engineered Materials and Acetyl Chain commercial models and continued stability in Acetate Tow. Celanese generated robust operating cash flow of $259 million and free cash flow of $135 million. The Company retains substantial financial flexibility as a result of continued liquidity and balance sheet strength. Celanese has identified and implemented structural cost and capital reduction actions and continues to execute a disciplined cash deployment strategy that will position it for growth after current challenges subside.

"Our culture at Celanese has long been action-oriented, which is even more critical in this environment. I am proud of the strong spirit of our employees across the world whose resolve and determination enabled us to deliver a healthy first quarter performance in these unprecedented times. We expect that reduced consumer activity, which started in the latter half of the first quarter, particularly in the Western Hemisphere, will work its way through relevant value chains to impact our second quarter demand more meaningfully. We continue to focus on those items within our control and will take further actions to maximize our cash generation in a weaker than anticipated demand environment and position ourselves for recovery," said Lori Ryerkerk, chairman and chief executive officer.

First Quarter 2020 Financial Highlights:

   

 

 

Three Months Ended

 

 

March 31,
2020

 

 

December 31,
2019

 

 

March 31,
2019

 

 

(unaudited)

 

 

(In $ millions, except per share data)

Net Sales

 

 

 

 

 

 

 

 

Engineered Materials

 

563

 

 

 

539

 

 

 

663

 

Acetate Tow

 

129

 

 

 

148

 

 

 

166

 

Acetyl Chain

 

799

 

 

 

771

 

 

 

889

 

Intersegment Eliminations

 

(31

)

 

 

(26

)

 

 

(31

)

Total

 

1,460

 

 

 

1,432

 

 

 

1,687

 

       

 

 

Three Months Ended

 

 

March 31,
2020

 

 

December 31,
2019

 

 

March 31,
2019

 

 

(unaudited)

 

 

(In $ millions, except per share data)

Operating Profit (Loss)

 

 

 

 

 

 

 

 

Engineered Materials

 

102

 

 

 

88

 

 

 

144

 

 

Acetate Tow

 

27

 

 

 

22

 

 

 

40

 

Acetyl Chain

 

135

 

 

 

108

 

 

 

202

 

Other Activities

 

(70

)

 

 

(150

)

 

 

(66

)

Total

 

194

 

 

 

68

 

 

 

320

 

 

 

Three Months Ended

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

 

(unaudited)

 

(In $ millions, except per share data)

Net Earnings (Loss)

220

 

 

45

 

 

338

 

 

 

 

 

 

 

Adjusted EBIT(1)

 

 

 

 

 

Engineered Materials

165

 

 

136

 

 

183

 

Acetate Tow

67

 

 

54

 

 

72

 

Acetyl Chain

139

 

 

144

 

 

203

 

Other Activities

(29

)

 

(31

)

 

(37

)

Total

342

 

 

303

 

 

421

 

 

 

 

 

 

 

Equity Earnings and Dividend Income, Other Income (Expense)

 

 

 

 

 

Engineered Materials

53

 

 

45

 

 

46

 

Acetate Tow

37

 

 

24

 

 

32

 

 

 

 

 

 

 

Operating EBITDA(1)

425

 

 

387

 

 

502

 

Diluted EPS - continuing operations

$

1.88

 

 

$

0.35

 

 

$

2.64

 

Diluted EPS - total

$

1.82

 

 

$

0.36

 

 

$

2.63

 

Adjusted EPS(1)

$

2.29

 

 

$

1.99

 

 

$

2.62

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

(128

)

 

(168

)

 

(177

)

Net cash provided by (used in) financing activities

(16

)

 

(199

)

 

(130

)

Net cash provided by (used in) operating activities

259

 

 

326

 

 

307

 

Free cash flow(1)

135

 

 

179

 

 

224

 

______________________________

(1) See "Non-US GAAP Financial Measures" below.

First Quarter 2020 Highlights:

  • Completed the previously announced acquisition of Nouryon's redispersible polymers powders business offered under the Elotex brand. The redispersible powders product line compliments the Acetyl Chain derivatization strategy.
  • The Acetyl Chain shifted the timeline associated with the acetic acid reconfiguration project and related capacity expansion in Clear Lake; mechanical completion is now estimated in 2023.
  • Completed US dollar-denominated bilateral term loans totaling $300 million with a borrowing rate of 85 basis points above LIBOR.
  • Completed $150 million of share repurchases during the first quarter.
  • Successfully met our Engineered Materials project pipeline targets despite travel and collaboration restrictions through most of the first quarter, including key opportunities in electric vehicles, 5G infrastructure, and mobile devices.
  • Supported many of our customers as they pivoted to respond to the COVID-19 crisis, including the supply of Laprene elastomers to produce reusable personal protective equipment face masks, EVA for respirator tubing, and Clarifoil for anti-fog protection in face shields.
  • Announced the launch of Sustainability on Celanese.com, enabling sustainability content to be presented in the Environmental, Social, and Governance framework, focused on the Celanese culture of stewardship.
  • Received the ENERGY STAR Partner of the Year Sustained Excellence Award for continued leadership and superior contributions to ENERGY STAR for the fifth consecutive year.
  • Elected Lori Ryerkerk to succeed Mark Rohr as Chairman of the Board of Directors on April 16, 2020.

First Quarter 2020 Business Segment Overview

Engineered Materials (EM)

Engineered Materials generated first quarter net sales of $563 million, an increase of 4 percent over the fourth quarter of 2019 on higher volume. The business successfully offset lower sequential volume in Asia as a result of Chinese New Year and the impact of COVID-19 with robust growth in the Western Hemisphere driven by volume ramp-up of recent project wins, which also partially offset the demand softness that began to materialize towards the end of the first quarter. The EM business was able to generate GAAP operating profit of $102 million and adjusted EBIT of $165 million. First quarter operating profit margin of 18.1 percent and adjusted EBIT margin of 29.3 percent, increased by 180 basis points and 410 basis points, respectively, over the prior quarter. Margin expansion was driven by sustained pricing levels amid sequentially lower raw material costs and incremental contributions from affiliate earnings. As a result, the overall business grew GAAP operating profit and adjusted EBIT on a sequential basis.

Acetyl Chain

The Acetyl Chain recorded net sales of $799 million in the first quarter, as sequential volume growth of 5 percent partially offset a continued decline in industry pricing resulting from weakness in Asian demand and underlying raw materials. GAAP operating profit of $135 million and adjusted EBIT of $139 million with operating profit margin of 16.9 percent and adjusted EBIT margin of 17.4 percent were lower than the prior quarter due primarily to weaker industry pricing. Income was negatively affected by the COVID-19 crisis by approximately $15 million, largely through customer order cancellations in March. The Acetyl Chain was able to utilize its global supply network to redirect incremental acetic acid to the Western Hemisphere in response to the continued Chinese acetic acid pricing declines and lower than expected country demand. The Acetyl Chain also continued to execute its derivatization strategy to place 8 percent more tonnage downstream in VAM compared to the fourth quarter. The business was also able to successfully complete the first full turnaround of the methanol joint venture at Clear Lake within the quarter at a cost of approximately $15 million and does not anticipate another turnaround with this unit for four years.

Acetate Tow

Acetate Tow reported GAAP operating profit of $27 million and adjusted EBIT of $67 million in the first quarter, improvements over the fourth quarter of 2019 as demand remained resilient. The business continues to deliver consistent earnings performance over the last two years. Dividends from affiliates were $37 million in the first quarter, higher sequentially due to the timing of dividend payments and consistent with the same period last year.

Cash Flow and Tax

The Company delivered strong first quarter operating cash flow and free cash flow of $259 million and $135 million, respectively, driven by continued business performance and focused working capital initiatives. Capital expenditures in the quarter were $119 million, including several growth and productivity-based projects in Engineered Materials and the Acetyl Chain. The Company now anticipates full year capital expenditures of less than $350 million, a reduction from prior expectations of $500 million. For the quarter, a total of $224 million in cash was returned to shareholders, including $150 million in share repurchases and $74 million in dividends. The effective US GAAP tax rate was 22 percent in the first quarter compared to 12 percent in the same quarter of last year, primarily due to currency movements and changes in the jurisdictional mix of earnings. The tax rate for adjusted EPS was 13 percent in the quarter unchanged from the full year 2019 adjusted tax rate.

Outlook

"As a result of our work over many years to improve our businesses and strengthen our balance sheet, we are well-positioned to meet the current macro-economic challenges," continued Ryerkerk. "We anticipate that we will generate $300 to $400 million of incremental cash due specifically to the actions we are currently taking on productivity, working capital management, and capital expenditures prioritization which allow us to offset meaningful demand and earnings challenges and deliver exceptionally resilient cash flow in 2020. We remain committed to keeping our employees safe, meeting our customers' needs, and delivering sustained value for our shareholders in any environment."

Due to uncertainties regarding the duration and impact of the coronavirus (COVID-19) pandemic, Celanese is suspending its previously announced annual adjusted earnings per share guidance for 2020.

The Company's prepared remarks related to the first quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library after market close on April 27, 2020. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our website. See "Non-GAAP Financial Measures" below.

Celanese Corporation is a global chemical leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Our businesses use the full breadth of Celanese's global chemistry, technology and commercial expertise to create value for our customers, employees, shareholders 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 7,700 employees worldwide and had 2019 net sales of $6.3 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. 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. 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; the ability to identify desirable potential acquisition targets and to consummate acquisition or investment transactions consistent with the Company's strategy; 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 tariffs, tax rates or legislation; 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, public health crises (including, but not limited to, the COVID-19 pandemic), 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 or other crises including public health crises; 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.

The extent to which COVID-19 will adversely impact our business, financial condition and results of operations will depend on numerous evolving factors, which are highly uncertain, rapidly changing and cannot be predicted, including: the duration and scope of the outbreak; governmental, business and individual actions that have been and continue to be taken in response to the outbreak, including social distancing, work-at-home, stay-at-home and shelter-in-place orders and shutdowns, travel restrictions and quarantines; the effect of the outbreak on our customers, suppliers, supply chain and other business partners; our ability during the outbreak to provide our products and services, including the health and well-being of our employees; business disruptions caused by actual or potential plant, workplace and office closures, and an increased reliance on employees working from home, disruptions to or delays in ongoing laboratory and product testing, experiments and operations, staffing shortages, travel limitations, cyber security and data accessibility, or communication or mass transit disruptions, any of which could adversely impact our business operations or delay necessary interactions with local regulators, manufacturing sites and other important agencies and contractors; the ability of our customers to pay for our products and services during and following the outbreak; the impact of the outbreak on the financial markets and economic activity generally; our ability to access usual sources of liquidity on reasonable terms; and our ability to comply with the financial covenant in our Credit Agreement if a material economic downturn results in increased indebtedness or substantially lower EBITDA.

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 three business segments, Engineered Materials, Acetate Tow and Acetyl Chain.

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 do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales.
  • 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 do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

    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 April 27, 2020 and also available on our website at investors.celanese.com under Financial Information/Financial Document Library.

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

 

March 31,
2020

 

December 31,
2019

 

March 31,
2019

 

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

Net sales

1,460

 

 

1,432

 

 

1,687

 

Cost of sales

(1,112

)

 

(1,116

)

 

(1,234

)

Gross profit

348

 

 

316

 

 

453

 

Selling, general and administrative expenses

(125

)

 

(125

)

 

(120

)

Amortization of intangible assets

(5

)

 

(6

)

 

(6

)

Research and development expenses

(17

)

 

(17

)

 

(16

)

Other (charges) gains, net

(6

)

 

(102

)

 

4

 

Foreign exchange gain (loss), net

(1

)

 

2

 

 

5

 

Operating profit (loss)

194

 

 

68

 

 

320

 

Equity in net earnings (loss) of affiliates

57

 

 

48

 

 

50

 

Non-operating pension and other postretirement employee benefit (expense) income

28

 

 

(71

)

 

17

 

Interest expense

(28

)

 

(28

)

 

(31

)

Interest income

2

 

 

2

 

 

1

 

Dividend income - equity investments

37

 

 

24

 

 

32

 

Other income (expense), net

2

 

 

(2

)

 

(4

)

Earnings (loss) from continuing operations before tax

292

 

 

41

 

 

385

 

Income tax (provision) benefit

(65

)

 

3

 

 

(46

)

Earnings (loss) from continuing operations

227

 

 

44

 

 

339

 

Earnings (loss) from operation of discontinued operations

(7

)

 

1

 

 

(1

)

Income tax (provision) benefit from discontinued operations

 

 

 

 

 

Earnings (loss) from discontinued operations

(7

)

 

1

 

 

(1

)

Net earnings (loss)

220

 

 

45

 

 

338

 

Net (earnings) loss attributable to noncontrolling interests

(2

)

 

(2

)

 

(1

)

Net earnings (loss) attributable to Celanese Corporation

218

 

 

43

 

 

337

 

Amounts attributable to Celanese Corporation

 

 

 

 

 

Earnings (loss) from continuing operations

225

 

 

42

 

 

338

 

Earnings (loss) from discontinued operations

(7

)

 

1

 

 

(1

)

Net earnings (loss)

218

 

 

43

 

 

337

 

Earnings (loss) per common share - basic

 

 

 

 

 

Continuing operations

1.89

 

 

0.35

 

 

2.65

 

Discontinued operations

(0.06

)

 

0.01

 

 

(0.01

)

Net earnings (loss) - basic

1.83

 

 

0.36

 

 

2.64

 

Earnings (loss) per common share - diluted

 

 

 

 

 

Continuing operations

1.88

 

 

0.35

 

 

2.64

 

Discontinued operations

(0.06

)

 

0.01

 

 

(0.01

)

Net earnings (loss) - diluted

1.82

 

 

0.36

 

 

2.63

 

Weighted average shares (in millions)

 

 

 

 

 

Basic

119.3

 

 

120.3

 

 

127.5

 

Diluted

119.9

 

 

120.9

 

 

128.2

 

 

Consolidated Balance Sheets - Unaudited

 

As of
March 31,
2020

 

As of
December 31,
2019

 

(In $ millions)

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

570

 

 

463

 

Trade receivables - third party and affiliates, net

853

 

 

850

 

Non-trade receivables, net

307

 

 

331

 

Inventories

1,036

 

 

1,038

 

Marketable securities

38

 

 

40

 

Other assets

51

 

 

43

 

Total current assets

2,855

 

 

2,765

 

Investments in affiliates

981

 

 

975

 

Property, plant and equipment, net

3,678

 

 

3,713

 

Operating lease right-of-use assets

201

 

 

203

 

Deferred income taxes

91

 

 

96

 

Other assets

381

 

 

338

 

Goodwill

1,056

 

 

1,074

 

Intangible assets, net

302

 

 

312

 

Total assets

9,545

 

 

9,476

 

LIABILITIES AND EQUITY

 

 

 

Current Liabilities

 

 

 

Short-term borrowings and current installments of long-term debt - third party and affiliates

749

 

 

496

 

Trade payables - third party and affiliates

724

 

 

780

 

Other liabilities

422

 

 

461

 

Income taxes payable

33

 

 

17

 

Total current liabilities

1,928

 

 

1,754

 

Long-term debt, net of unamortized deferred financing costs

3,356

 

 

3,409

 

Deferred income taxes

258

 

 

257

 

Uncertain tax positions

161

 

 

165

 

Benefit obligations

568

 

 

589

 

Operating lease liabilities

175

 

 

181

 

Other liabilities

263

 

 

223

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Treasury stock, at cost

(3,996

)

 

(3,846

)

Additional paid-in capital

242

 

 

254

 

Retained earnings

6,543

 

 

6,399

 

Accumulated other comprehensive income (loss), net

(341

)

 

(300

)

Total Celanese Corporation stockholders' equity

2,448

 

 

2,507

 

Noncontrolling interests

388

 

 

391

 

Total equity

2,836

 

 

2,898

 

Total liabilities and equity

9,545

 

 

9,476

 

 

Non-US GAAP Financial Measures and Supplemental Information

April 27, 2020

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 three business segments, Engineered Materials, Acetate Tow and Acetyl Chain.

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 Financial Information/Financial Document Library page of our website, investors.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 Financial Information/Financial Document Library page of our website, investors.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 do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. 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.
  • 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 do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

    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.

Supplemental Information

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

  • Net sales for each of our business segments and the percentage increase or decrease in net sales attributable to price, volume, currency and other factors for each of our business segments.
  • Cash dividends received from our equity 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

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

218

 

 

852

 

 

43

 

 

263

 

 

209

 

 

337

 

(Earnings) loss from discontinued operations

7

 

 

6

 

 

(1

)

 

5

 

 

1

 

 

1

 

Interest income

(2

)

 

(6

)

 

(2

)

 

(1

)

 

(2

)

 

(1

)

Interest expense

28

 

 

115

 

 

28

 

 

27

 

 

29

 

 

31

 

Refinancing expense

 

 

4

 

 

 

 

 

 

4

 

 

 

Income tax provision (benefit)

65

 

 

124

 

 

(3

)

 

53

 

 

28

 

 

46

 

Certain Items attributable to Celanese Corporation (Table 8)

26

 

 

381

 

 

238

 

 

29

 

 

107

 

 

7

 

Adjusted EBIT

342

 

 

1,476

 

 

303

 

 

376

 

 

376

 

 

421

 

Depreciation and amortization expense(1)

83

 

 

329

 

 

84

 

 

82

 

 

82

 

 

81

 

Operating EBITDA

425

 

 

1,805

 

 

387

 

 

458

 

 

458

 

 

502

 

 

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions)

Engineered Materials

2

 

 

4

 

 

2

 

 

1

 

 

 

 

1

 

Acetate Tow

 

 

9

 

 

2

 

 

5

 

 

2

 

 

 

Acetyl Chain

 

 

10

 

 

3

 

 

6

 

 

 

 

1

 

Other Activities(2)

 

 

 

 

 

 

 

 

 

 

 

Accelerated depreciation and amortization expense

2

 

 

23

 

 

7

 

 

12

 

 

2

 

 

2

 

Depreciation and amortization expense(1)

83

 

 

329

 

 

84

 

 

82

 

 

82

 

 

81

 

Total depreciation and amortization expense

85

 

 

352

 

 

91

 

 

94

 

 

84

 

 

83

 

______________________________

(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
 

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

102

 

 

18.1

%

 

446

 

 

18.7

%

 

88

 

 

16.3

%

 

111

 

 

18.8

%

 

103

 

 

17.4

%

 

144

 

 

21.7

%

Acetate Tow

27

 

 

20.9

%

 

52

 

 

8.2

%

 

22

 

 

14.9

%

 

34

 

 

21.5

%

 

(44

)

 

(26.8

)%

 

40

 

 

24.1

%

Acetyl Chain(1)

135

 

 

16.9

%

 

678

 

 

20.0

%

 

108

 

 

14.0

%

 

180

 

 

20.8

%

 

188

 

 

21.7

%

 

202

 

 

22.7

%

Other Activities(2)

(70

)

 

 

 

(342

)

 

 

 

(150

)

 

 

 

(65

)

 

 

 

(61

)

 

 

 

(66

)

 

 

Total

194

 

 

13.3

%

 

834

 

 

13.2

%

 

68

 

 

4.7

%

 

260

 

 

16.4

%

 

186

 

 

11.7

%

 

320

 

 

19.0

%

Less: Net Earnings (Loss) Attributable to NCI(1)

2

 

 

 

 

6

 

 

 

 

2

 

 

 

 

2

 

 

 

 

1

 

 

 

 

1

 

 

 

Operating Profit (Loss) Attributable to Celanese Corporation

192

 

 

13.2

%

 

828

 

 

13.1

%

 

66

 

 

4.6

%

 

258

 

 

16.3

%

 

185

 

 

11.6

%

 

319

 

 

18.9

%

Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

102

 

 

18.1

%

 

446

 

 

18.7

%

 

88

 

 

16.3

%

 

111

 

 

18.8

%

 

103

 

 

17.4

%

 

144

 

 

21.7

%

Acetate Tow

27

 

 

20.9

%

 

52

 

 

8.2

%

 

22

 

 

14.9

%

 

34

 

 

21.5

%

 

(44

)

 

(26.8

)%

 

40

 

 

24.1

%

Acetyl Chain(1)

133

 

 

16.6

%

 

672

 

 

19.8

%

 

106

 

 

13.7

%

 

178

 

 

20.5

%

 

187

 

 

21.6

%

 

201

 

 

22.6

%

Other Activities(2)

(70

)

 

 

 

(342

)

 

 

 

(150

)

 

 

 

(65

)

 

 

 

(61

)

 

 

 

(66

)

 

 

Total

192

 

 

13.2

%

 

828

 

 

13.1

%

 

66

 

 

4.6

%

 

258

 

 

16.3

%

 

185

 

 

11.6

%

 

319

 

 

18.9

%

Equity Earnings and Dividend Income, Other Income (Expense) Attributable to Celanese Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

53

 

 

 

 

168

 

 

 

 

45

 

 

 

 

41

 

 

 

 

36

 

 

 

 

46

 

 

 

Acetate Tow

37

 

 

 

 

112

 

 

 

 

24

 

 

 

 

27

 

 

 

 

29

 

 

 

 

32

 

 

 

Acetyl Chain

1

 

 

 

 

5

 

 

 

 

1

 

 

 

 

2

 

 

 

 

1

 

 

 

 

1

 

 

 

Other Activities(2)

5

 

 

 

 

2

 

 

 

 

 

 

 

 

2

 

 

 

 

1

 

 

 

 

(1

)

 

 

Total

96

 

 

 

 

287

 

 

 

 

70

 

 

 

 

72

 

 

 

 

67

 

 

 

 

78

 

 

 

Non-Operating Pension and Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acetate Tow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acetyl Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Activities(2)

28

 

 

 

 

(20

)

 

 

 

(71

)

 

 

 

17

 

 

 

 

17

 

 

 

 

17

 

 

 

Total

28

 

 

 

 

(20

)

 

 

 

(71

)

 

 

 

17

 

 

 

 

17

 

 

 

 

17

 

 

 

Certain Items Attributable to Celanese Corporation (Table 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

10

 

 

 

 

7

 

 

 

 

3

 

 

 

 

2

 

 

 

 

9

 

 

 

 

(7

)

 

 

Acetate Tow

3

 

 

 

 

104

 

 

 

 

8

 

 

 

 

10

 

 

 

 

86

 

 

 

 

 

 

 

Acetyl Chain

5

 

 

 

 

50

 

 

 

 

37

 

 

 

 

11

 

 

 

 

1

 

 

 

 

1

 

 

 

Other Activities(2)

8

 

 

 

 

220

 

 

 

 

190

 

 

 

 

6

 

 

 

 

11

 

 

 

 

13

 

 

 

Total

26

 

 

 

 

381

 

 

 

 

238

 

 

 

 

29

 

 

 

 

107

 

 

 

 

7

 

 

 

Adjusted EBIT / Adjusted EBIT Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

165

 

 

29.3

%

 

621

 

 

26.0

%

 

136

 

 

25.2

%

 

154

 

 

26.1

%

 

148

 

 

25.0

%

 

183

 

 

27.6

%

Acetate Tow

67

 

 

51.9

%

 

268

 

 

42.1

%

 

54

 

 

36.5

%

 

71

 

 

44.9

%

 

71

 

 

43.3

%

 

72

 

 

43.4

%

Acetyl Chain

139

 

 

17.4

%

 

727

 

 

21.4

%

 

144

 

 

18.7

%

 

191

 

 

22.0

%

 

189

 

 

21.8

%

 

203

 

 

22.8

%

Other Activities(2)

(29

)

 

 

 

(140

)

 

 

 

(31

)

 

 

 

(40

)

 

 

 

(32

)

 

 

 

(37

)

 

 

Total

342

 

 

23.4

%

 

1,476

 

 

23.4

%

 

303

 

 

21.2

%

 

376

 

 

23.7

%

 

376

 

 

23.6

%

 

421

 

 

25.0

%

___________________________

(1)

 

Net earnings (loss) attributable to NCI is included within the Acetyl Chain 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.)

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

32

 

 

 

 

127

 

 

 

 

33

 

 

 

 

32

 

 

 

 

31

 

 

 

 

31

 

 

 

Acetate Tow

8

 

 

 

 

36

 

 

 

 

8

 

 

 

 

9

 

 

 

 

9

 

 

 

 

10

 

 

 

Acetyl Chain

39

 

 

 

 

151

 

 

 

 

39

 

 

 

 

37

 

 

 

 

38

 

 

 

 

37

 

 

 

Other Activities(2)

4

 

 

 

 

15

 

 

 

 

4

 

 

 

 

4

 

 

 

 

4

 

 

 

 

3

 

 

 

Total

83

 

 

 

 

329

 

 

 

 

84

 

 

 

 

82

 

 

 

 

82

 

 

 

 

81

 

 

 

Operating EBITDA / Operating EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

197

 

 

35.0

%

 

748

 

 

31.3

%

 

169

 

 

31.4

%

 

186

 

 

31.5

%

 

179

 

 

30.2

%

 

214

 

 

32.3

%

Acetate Tow

75

 

 

58.1

%

 

304

 

 

47.8

%

 

62

 

 

41.9

%

 

80

 

 

50.6

%

 

80

 

 

48.8

%

 

82

 

 

49.4

%

Acetyl Chain

178

 

 

22.3

%

 

878

 

 

25.9

%

 

183

 

 

23.7

%

 

228

 

 

26.3

%

 

227

 

 

26.2

%

 

240

 

 

27.0

%

Other Activities(2)

(25

)

 

 

 

(125

)

 

 

 

(27

)

 

 

 

(36

)

 

 

 

(28

)

 

 

 

(34

)

 

 

Total

425

 

 

29.1

%

 

1,805

 

 

28.7

%

 

387

 

 

27.0

%

 

458

 

 

28.9

%

 

458

 

 

28.8

%

 

502

 

 

29.8

%

___________________________

(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

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

 

 

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

225

 

 

1.88

 

 

858

 

 

6.89

 

 

42

 

 

0.35

 

 

268

 

 

2.17

 

 

210

 

 

1.67

 

 

338

 

 

2.64

 

Income tax provision (benefit)

65

 

 

 

 

124

 

 

 

 

(3

)

 

 

 

53

 

 

 

 

28

 

 

 

 

46

 

 

 

Earnings (loss) from continuing operations before tax

290

 

 

 

 

982

 

 

 

 

39

 

 

 

 

321

 

 

 

 

238

 

 

 

 

384

 

 

 

Certain Items attributable to Celanese Corporation (Table 8)

26

 

 

 

 

381

 

 

 

 

238

 

 

 

 

29

 

 

 

 

107

 

 

 

 

7

 

 

 

Refinancing and related expenses

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

Adjusted earnings (loss) from continuing operations before tax

316

 

 

 

 

1,367

 

 

 

 

277

 

 

 

 

350

 

 

 

 

349

 

 

 

 

391

 

 

 

Income tax (provision) benefit on adjusted earnings(1)

(41

)

 

 

 

(178

)

 

 

 

(36

)

 

 

 

(38

)

 

 

 

(49

)

 

 

 

(55

)

 

 

Adjusted earnings (loss) from continuing operations(2)

275

 

 

2.29

 

 

1,189

 

 

9.53

 

 

241

 

 

1.99

 

 

312

 

 

2.53

 

 

300

 

 

2.38

 

 

336

 

 

2.62

 

 

Diluted shares (in millions)(3)

Weighted average shares outstanding

119.3

 

 

 

 

123.9

 

 

 

 

120.3

 

 

 

 

122.7

 

 

 

 

125.3

 

 

 

 

127.5

 

 

 

Incremental shares attributable to equity awards

0.6

 

 

 

 

0.8

 

 

 

 

0.6

 

 

 

 

0.6

 

 

 

 

0.5

 

 

 

 

0.7

 

 

 

Total diluted shares

119.9

 

 

 

 

124.7

 

 

 

 

120.9

 

 

 

 

123.3

 

 

 

 

125.8

 

 

 

 

128.2

 

 

 

______________________________

(1)

 

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

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In percentages)

Adjusted effective tax rate

13

 

 

 

 

13

 

 

 

 

13

 

 

 

 

11

 

 

 

 

14

 

 

 

 

14

 

 

 

 

(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)

2019

 

16.7

 

 

6.5

 

 

(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

 

Estimated

 

Actual

 

2020

 

2019

 

(In percentages)

US GAAP annual effective tax rate

17

 

 

13

 

Discrete quarterly recognition of GAAP items(1)

(2

)

 

 

Tax impact of other charges and adjustments(2)

(1

)

 

 

Utilization of foreign tax credits

(1

)

 

(3

)

Changes in valuation allowances, excluding impact of other charges and adjustments(3)

 

 

3

 

Adjusted tax rate

13

 

 

13

 

______________________________

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.

Table 4

Net Sales by Segment - Unaudited

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions)

Engineered Materials

563

 

 

2,386

 

 

539

 

 

591

 

 

593

 

 

663

 

Acetate Tow

129

 

 

636

 

 

148

 

 

158

 

 

164

 

 

166

 

Acetyl Chain

799

 

 

3,392

 

 

771

 

 

867

 

 

865

 

 

889

 

Intersegment eliminations(1)

(31

)

 

(117

)

 

(26

)

 

(30

)

 

(30

)

 

(31

)

Net sales

1,460

 

 

6,297

 

 

1,432

 

 

1,586

 

 

1,592

 

 

1,687

 

___________________________

(1)

 

Includes intersegment sales primarily related to the Acetyl Chain.

Table 4a

Factors Affecting Segment Net Sales Sequentially - Unaudited

 

Three Months Ended March 31, 2020 Compared to Three Months Ended December 31, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

4

 

 

 

 

 

 

 

 

4

 

 

Acetate Tow

(9

)

 

(4

)

 

 

 

 

 

(13

)

 

Acetyl Chain

5

 

 

(1

)

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

3

 

 

(1

)

 

 

 

 

 

2

 

 

Three Months Ended December 31, 2019 Compared to Three Months Ended September 30, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(9

)

 

 

 

 

 

 

 

(9

)

 

Acetate Tow

(6

)

 

 

 

 

 

 

 

(6

)

 

Acetyl Chain

(11

)

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(10

)

 

 

 

 

 

 

 

(10

)

 

Three Months Ended September 30, 2019 Compared to Three Months Ended June 30, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

2

 

 

(2

)

 

(1

)

 

 

 

(1

)

 

Acetate Tow

(2

)

 

(1

)

 

 

 

 

 

(3

)

 

Acetyl Chain

1

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

2

 

 

(1

)

 

(1

)

 

 

 

 

 

Three Months Ended June 30, 2019 Compared to Three Months Ended March 31, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(7

)

 

(3

)

 

(1

)

 

 

 

(11

)

 

Acetate Tow

(1

)

 

 

 

 

 

 

 

(1

)

 

Acetyl Chain

2

 

 

(4

)

 

(1

)

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

(3

)

 

(1

)

 

 

 

(6

)

 

Three Months Ended March 31, 2019 Compared to Three Months Ended December 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

5

 

 

2

 

 

 

 

 

 

7

 

(1)

Acetate Tow

1

 

 

2

 

 

 

 

 

 

3

 

 

Acetyl Chain

5

 

 

(10

)

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

5

 

 

(5

)

 

 

 

 

 

 

 

_________________________

(1)

 

2019 includes the effect of the acquisition of Next Polymers Ltd.

Table 4b

Factors Affecting Segment Net Sales Year Over Year - Unaudited

 

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(9

)

 

(5

)

 

(1

)

 

 

 

(15

)

Acetate Tow

(17

)

 

(5

)

 

 

 

 

 

(22

)

Acetyl Chain

(3

)

 

(7

)

 

(1

)

 

1

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

Total Company

(7

)

 

(6

)

 

(1

)

 

1

 

 

(13

)

Three Months Ended December 31, 2019 Compared to Three Months Ended December 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(9

)

 

(3

)

 

(1

)

 

 

 

(13

)

Acetate Tow

(8

)

 

 

 

 

 

 

 

(8

)

Acetyl Chain

(4

)

 

(13

)

 

(1

)

 

 

 

(18

)

 

 

 

 

 

 

 

 

 

 

Total Company

(6

)

 

(8

)

 

(1

)

 

 

 

(15

)

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(4

)

 

(2

)

 

(2

)

 

 

 

(8

)

Acetate Tow

 

 

 

 

 

 

 

 

 

Acetyl Chain

6

 

 

(18

)

 

(2

)

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

Total Company

2

 

 

(11

)

 

(2

)

 

1

 

 

(10

)

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(8

)

 

 

 

(3

)

 

 

 

(11

)

Acetate Tow

1

 

 

1

 

 

(1

)

 

 

 

1

 

Acetyl Chain

(1

)

 

(14

)

 

(3

)

 

 

 

(18

)

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(8

)

 

(3

)

 

 

 

(14

)

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(3

)

 

7

 

 

(4

)

 

 

 

 

Acetate Tow

(1

)

 

 

 

 

 

 

 

(1

)

Acetyl Chain

(4

)

 

(8

)

 

(3

)

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(2

)

 

(4

)

 

 

 

(9

)

Table 4c

Factors Affecting Segment Net Sales Year Over Year - Unaudited

 

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(5

)

 

 

 

(3

)

 

 

 

(8

)

Acetate Tow

(2

)

 

 

 

 

 

 

 

(2

)

Acetyl Chain

(1

)

 

(13

)

 

(2

)

 

 

 

(16

)

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(7

)

 

(2

)

 

 

 

(12

)

Table 5

Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions, except percentages)

Net cash provided by (used in) investing activities

(128

)

 

(493

)

 

(168

)

 

(82

)

 

(66

)

 

(177

)

Net cash provided by (used in) financing activities

(16

)

 

(935

)

 

(199

)

 

(299

)

 

(307

)

 

(130

)

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

259

 

 

1,454

 

 

326

 

 

397

 

 

424

 

 

307

 

Capital expenditures on property, plant and equipment

(119

)

 

(370

)

 

(144

)

 

(82

)

 

(65

)

 

(79

)

Distributions to NCI

(5

)

 

(10

)

 

(3

)

 

 

 

(3

)

 

(4

)

Free cash flow(1)(2)

135

 

 

1,074

 

 

179

 

 

315

 

 

356

 

 

224

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

1,460

 

 

6,297

 

 

1,432

 

 

1,586

 

 

1,592

 

 

1,687

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow as % of Net sales

9.2

%

 

17.1

%

 

12.5

%

 

19.9

%

 

22.4

%

 

13.3

%

______________________________

(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 finance lease payments of $26 million and $24 million for the years ended December 31, 2020 and 2019, respectively.

Table 6

Cash Dividends Received - Unaudited

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions)

Dividends from equity method investments

46

 

 

168

 

 

42

 

 

15

 

 

41

 

 

70

 

Dividends from equity investments without readily determinable fair values

37

 

 

113

 

 

24

 

 

27

 

 

30

 

 

32

 

Total

83

 

281

 

 

66

 

 

42

 

 

71

 

 

102

 

Table 7

Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

(In $ millions)

Short-term borrowings and current installments of long-term debt - third party and affiliates

749

 

 

496

 

 

496

 

 

368

 

 

319

 

 

743

 

Long-term debt, net of unamortized deferred financing costs

3,356

 

 

3,409

 

 

3,409

 

 

3,359

 

 

3,444

 

 

2,933

 

Total debt

4,105

 

 

3,905

 

 

3,905

 

 

3,727

 

 

3,763

 

 

3,676

 

Cash and cash equivalents

(570

)

 

(463

)

 

(463

)

 

(497

)

 

(491

)

 

(441

)

Net debt

3,535

 

3,442

 

3,442

 

3,230

 

3,272

 

3,235

 

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:

 

Q1 '20

 

2019

 

Q4 '19

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

Income Statement Classification

 

(In $ millions)

 

 

Plant/office closures

3

 

 

26

 

 

12

 

 

9

 

 

2

 

 

3

 

 

Cost of sales / SG&A / Other (charges) gains, net / Gain (loss) on disposition of businesses and assets, net

Asset impairments

4

 

 

94

 

(1)

2

 

 

9

 

 

83

 

 

 

 

Cost of sales / Other (charges) gains, net

Clear Lake incident

4

 

 

34

 

 

32

 

 

2

 

 

 

 

 

 

Cost of sales

Mergers and acquisitions

7

 

 

12

 

 

3

 

 

2

 

 

4

 

 

3

 

 

Cost of sales / SG&A

Actuarial (gain) loss on pension and postretirement plans

 

 

88

 

 

88

 

 

 

 

 

 

 

 

Cost of sales / SG&A / Non-operating pension and other postretirement employee benefit (expense) income

Restructuring

7

 

 

27

 

 

6

 

 

7

 

 

15

 

 

(1

)

 

SG&A / Other (charges) gains, net / Non-operating pension and other postretirement employee benefit (expense) income

European Commission investigation

 

 

89

 

 

89

 

 

 

 

 

 

 

 

Other (charges) gains, net

Commercial disputes

 

 

10

 

 

6

 

 

 

 

2

 

 

2

 

 

Cost of sales / SG&A / Other (charges) gains, net

Other

1

 

 

1

 

 

 

 

 

 

1

 

 

 

 

SG&A / Gain (loss) on disposition of businesses and assets, net

Certain Items attributable to Celanese Corporation

26

 

 

381

 

 

238

 

 

29

 

 

107

 

 

7

 

 

 

______________________________

(1)

 

Includes $5 million of asset impairments in 2019 related to the Clear Lake incident.

Table 9

Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited

 

 

 

 

 

2019

 

 

 

 

 

(In $ millions,
except percentages)

Net earnings (loss) attributable to Celanese Corporation

 

 

 

 

852

 

 

 

 

 

 

 

Adjusted EBIT (Table 1)

 

 

 

 

1,476

 

Adjusted effective tax rate (Table 3a)

 

 

 

 

13

%

Adjusted EBIT tax effected

 

 

 

 

1,284

 

 

 

 

 

 

 

 

2019

 

2018

 

Average

 

(In $ millions, except percentages)

Short-term borrowings and current installments of long-term debt - third parties and affiliates

496

 

 

561

 

 

529

 

Long-term debt, net of unamortized deferred financing costs

3,409

 

 

2,970

 

 

3,190

 

Celanese Corporation stockholders' equity

2,507

 

 

2,984

 

 

2,746

 

Invested capital

 

 

 

 

6,465

 

 

 

 

 

 

 

Return on invested capital (adjusted)

 

 

 

 

19.9

%

 

 

 

 

 

 

Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital

 

 

 

 

13.2

%

 

Investor Relations
Abe Paul
Phone: +1 972 443 4432
abraham.paul@celanese.com

Media - U.S.
Travis Jacobsen
Phone: +1 972 443 3750
William.Jacobsen@celanese.com

Media - Europe
Petra Czugler
Phone: +49 174 762 8784
petra.czugler@celanese.com

Source: Celanese Corporation