0001306830-20-000200 8-K 18 20201026 2.02 9.01 20201026 20201026 Celanese Corp 0001306830 2820 980420726 DE 1231 8-K 34 001-32410 201259131 222 W. LAS COLINAS BLVD., SUITE 900N IRVING TX 75039-5421 972-443-4000 222 W. LAS COLINAS BLVD., SUITE 900N IRVING TX 75039-5421 Celanese CORP 20041102 Blackstone Crystal Holdings Capital Partners (Cayman) IV Ltd. 20041022 8-K 1 ce-20201026.htm 8-K ce-20201026
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 26, 2020 (October 25, 2020)
CELANESE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware001-3241098-0420726
   
(State or other jurisdiction
of incorporation)
(Commission File
Number)
(IRS Employer
Identification No.)
222 West Las Colinas Blvd. Suite 900N, Irving, TX 75039
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972443-4000

N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per shareCEThe New York Stock Exchange
1.125% Senior Notes due 2023CE /23The New York Stock Exchange
1.250% Senior Notes due 2025CE /25The New York Stock Exchange
2.125% Senior Notes due 2027CE /27The New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

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Item 2.02 Results of Operations and Financial Condition
On October 25, 2020, Celanese Corporation (the "Company") issued a press release reporting the financial results for its third quarter 2020. A copy of the press release is attached to this Current Report on Form 8-K ("Current Report") as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure. Each non-US GAAP financial measure appearing in the press release is accompanied by the most directly comparable US GAAP financial measure and is reconciled to the most comparable US GAAP financial measure in Exhibit 99.2, which includes other supplemental information of interest to investors, analysts and other parties, including the reasons why management believes such Non-US GAAP financial measures provide useful information to investors, and which is incorporated herein solely for purposes of this Item 2.02 disclosure.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are being furnished herewith:
Exhibit
Number
 
Description
  
104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document contained in Exhibit 101).
*In connection with the disclosure set forth in Item 2.02, the information in this Current Report, including the exhibits attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibits, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
    
 
CELANESE CORPORATION
 
 By:/s/ MICHAEL R. SULLIVAN
 Name: Michael R. Sullivan
 Title:  Vice President, Deputy General Counsel and Assistant Corporate Secretary 
 
Date:October 26, 2020
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EX-99.1 2 q320208-kex991.htm EX-99.1 Document

Exhibit 99.1
celogoa02a01a10a01a02a.jpg
Celanese Corporation
222 West Las Colinas Blvd.
Suite 900N
Irving, Texas 75039

Celanese Corporation Reports Third Quarter 2020 Earnings;
Highlights Strong Demand Recovery


Dallas, October 25, 2020: Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today reported third quarter GAAP diluted earnings per share of $1.76 and adjusted earnings per share of $1.95. The Company recorded net sales of $1.4 billion driven by 20 percent volume recovery over the prior quarter. Third quarter operating profit was $184 million and adjusted EBIT was $290 million, sequential increases of $101 million and $91 million, respectively. Engineered Materials leveraged its customer project model, and the Acetyl Chain exercised the flexibility of its global network to maximize sequential growth on demand recovery. Celanese generated operating cash flow of $431 million and free cash flow of $351 million in the quarter. Cash returned to shareholders in the third quarter totaled $184 million, consisting of $111 million in share repurchases and $73 million in dividends. The recently closed Polyplastics transaction unlocked cash proceeds of approximately $1.6 billion and further improves the Company's ability to opportunistically invest in organic growth, acquisitions, and share repurchases.
"Our financial results are again a reflection of the commitment of our employees to the success of Celanese in any environment. They have taken decisive actions throughout this year to respond to the difficult realities of COVID-19 and continue to navigate persistent challenges to better serve and support our customers each day. With the recovery we have seen to date, I am pleased to share that all of our production facilities across the globe are again fully staffed and operating to meet demand. We continue to closely monitor business conditions and will remain nimble and purposeful in preparing ourselves for continued recovery and growth in the future. We are encouraged by robust demand recovery for our products across all regions in the third quarter," said Lori Ryerkerk, chairman and chief executive officer.
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Third Quarter 2020 Financial Highlights:
Three Months Ended
September 30,
2020
June 30,
2020
September 30,
2019
(unaudited)
(In $ millions, except per share data)
Net Sales
Engineered Materials526 420 591 
Acetate Tow129 127 158 
Acetyl Chain776 662 867 
Intersegment Eliminations(20)(16)(30)
Total1,411 1,193 1,586 
Operating Profit (Loss)
Engineered Materials84 (13)111 
Acetate Tow30 31 34 
Acetyl Chain121 121 180 
Other Activities(51)(56)(65)
Total184 83 260 
Net Earnings (Loss)
209 109 265 
Adjusted EBIT(1)
Engineered Materials116 40 154 
Acetate Tow59 64 71 
Acetyl Chain126 116 191 
Other Activities(11)(21)(40)
Total290 199 376 
Equity Earnings and Dividend Income, Other Income (Expense)
Engineered Materials21 26 41 
Acetate Tow28 32 27 
Operating EBITDA(1)
378 285 458 
Diluted EPS - continuing operations$1.76 $0.93 $2.17 
Diluted EPS - total$1.75 $0.90 $2.13 
Adjusted EPS(1)
$1.95 $1.30 $2.53 
Net cash provided by (used in) investing activities(78)(181)(82)
Net cash provided by (used in) financing activities(290)(232)(299)
Net cash provided by (used in) operating activities431 379 397 
Free cash flow(1)
351 283 315 
______________________________
(1)See "Non-US GAAP Financial Measures" below.
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Third Quarter 2020 Highlights:
Completed in early October the previously announced sale of the 45 percent equity investment in the Polyplastics joint venture to Daicel for approximately $1.6 billion. Proceeds are expected to be redeployed to higher return investments.
Repurchased $111 million in shares in the third quarter in anticipation of the completion of the Polyplastics transaction. An additional approximately $400 million in share repurchases in connection with the Polyplastics transaction are expected to be completed during the fourth quarter of 2020, for a total of approximately $500 million.
Announced a project to expand GUR® UHMW-PE capacity by approximately 15 kt at the Bishop, Texas facility to meet growing demand including Celanese lithium-ion battery solutions. After completion in early 2022, total capacity will exceed 50 kt per year.
Launched BlueRidge™ cellulosic pellets, produced using cellulose from sustainably forested trees and acetic acid, as an alternative for conventional plastics in single-use consumer applications.
Delivered robust operating cash flow of $431 million and free cash flow of $351 million amid demand recovery.
Paid off bilateral term loans taken in the first quarter of 2020, totaling $300 million. The loans provided excess liquidity throughout the middle of 2020.
Elected Deborah J. Kissire to the Company's Board of Directors in October. Ms. Kissire is a retired partner from Ernst & Young LLP.
Third Quarter 2020 Business Segment Overview
Engineered Materials
Engineered Materials reported net sales of $526 million in the third quarter, resulting from a sequential volume increase of 27 percent that offset a price decrease of 6 percent due to mix. Volume expansion was driven by strong demand recovery for durable goods across all regions. Automotive volumes in the third quarter grew 81 percent over the prior quarter, slightly lower than the same quarter of last year. Additional growth in consumer appliance and industrial end-markets, along with continued resiliency in electronics, more than offset sequential volume deterioration in medical resulting from the deferral of certain elective procedures and destocking along that value chain. Engineered Materials generated GAAP operating income of $84 million and adjusted EBIT of $116 million, respective increases of $97 million and $76 million over the prior quarter. The business recorded third quarter operating profit margin of 16 percent and adjusted EBIT margin of 22 percent. Continued execution in the base business of Engineered Materials more than offset a $5 million sequential decline in affiliate earnings due primarily to weaker Ibn Sina performance.
Acetyl Chain
The Acetyl Chain generated third quarter net sales of $776 million, due to an 18 percent volume increase partially offset by a 2 percent price decrease from the prior quarter. Pricing for acetic acid and VAM remained depressed as the positive impact of
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demand recovery on industry utilization was largely offset by significantly improved industry supply. The Acetyl Chain continued to utilize its derivatization optionality to emulsions and redispersible powders where sequential margins improved modestly. The Acetyl Chain generated GAAP operating profit of $121 million and adjusted EBIT of $126 million, both at margins of 16 percent. The business successfully offset the impact of $25 million in raw material inflation at the end of the third quarter to deliver earnings growth over the prior quarter. The team also brought forward a catalyst change at the Clear Lake VAM facility and activated the global network to execute swaps and source material to ensure customer supply security and limit the third quarter adjusted EBIT impact of that turnaround to approximately $10 million.
Acetate Tow
Acetate Tow recorded net sales of $129 million due to volume and price expansion of 1 percent over the prior quarter. Third quarter GAAP operating profit was $30 million and adjusted EBIT was $59 million. Dividends from affiliates in the third quarter were $28 million, $4 million lower sequentially due to the timing of dividend payments.
Cash Flow and Tax
The Company generated third quarter operating cash flow and free cash flow of $431 million and $351 million, respectively. Capital expenditures in the quarter were $72 million. The effective US GAAP tax rate was 12 percent in the third quarter compared to 16 percent in the same quarter of last year, primarily due to a tax benefit recorded in the quarter for excess tax basis in an equity affiliate. The tax rate for adjusted earnings per share was 12 percent in the third quarter, compared to 11 percent in the same quarter last year, primarily due to the utilization of tax attribute carryforwards and the year over year earnings profile.
Outlook
"Across most of our end markets, global demand during the third quarter progressed well along the path of recovery," continued Ryerkerk. "We are monitoring the current resurgence of COVID-19 across various locations for any impact to our businesses. At this stage, the October and November order books are shaping consistently with the third quarter and show no indications of demand retraction. We expect continued momentum in the fourth quarter to partially offset various sequential headwinds including normal December seasonality and a major turnaround at our Frankfurt POM facility. Including all these factors, we expect full year 2020 adjusted earnings of approximately $7.00 to $7.10 per share. Looking to 2021, we remain confident that underlying demand will reach pre-COVID levels at some point in the year. While uncertainty remains, we continue to be focused on controllable actions to drive strong growth next year, including productivity, production planning, and disciplined capital deployment."
The Company is 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. For more information, see "Non-GAAP Financial Measures" below.
The Company's prepared remarks related to the third quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library on October 25, 2020. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our investor relations website under Financial Information/Non-GAAP Financial Measures. See also "Non-GAAP Financial Measures" below.
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Contacts:
Investor RelationsMedia - U.S.Media - Europe
Brandon AyacheTravis JacobsenPetra Czugler
Phone: +1 972 443 8509Phone: +1 972 443 3750
Phone: +49 174 762 8784
brandon.ayache@celanese.comWilliam.Jacobsen@celanese.competra.czugler@celanese.com
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 as well as facility turnarounds; 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, scope, severity and geographic spread 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, employee health issues, 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 and prolonged 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.
5


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 October 26, 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.
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Consolidated Statements of Operations - Unaudited
Three Months Ended
September 30,
2020
June 30,
2020
September 30,
2019
(In $ millions, except share and per share data)
Net sales1,411 1,193 1,586 
Cost of sales(1,084)(951)(1,172)
Gross profit327 242 414 
Selling, general and administrative expenses(106)(114)(120)
Amortization of intangible assets(6)(6)(6)
Research and development expenses(19)(18)(17)
Other (charges) gains, net(10)(21)(7)
Foreign exchange gain (loss), net(2)(1)
Gain (loss) on disposition of businesses and assets, net— (1)(3)
Operating profit (loss)184 83 260 
Equity in net earnings (loss) of affiliates25 31 45 
Non-operating pension and other postretirement employee benefit (expense) income
28 27 17 
Interest expense(28)(27)(27)
Interest income
Dividend income - equity investments29 32 27 
Other income (expense), net— — 
Earnings (loss) from continuing operations before tax241 147 323 
Income tax (provision) benefit(30)(35)(53)
Earnings (loss) from continuing operations211 112 270 
Earnings (loss) from operation of discontinued operations(2)(4)(6)
Income tax (provision) benefit from discontinued operations— 
Earnings (loss) from discontinued operations(2)(3)(5)
Net earnings (loss)209 109 265 
Net (earnings) loss attributable to noncontrolling interests(2)(2)(2)
Net earnings (loss) attributable to Celanese Corporation207 107 263 
Amounts attributable to Celanese Corporation  
Earnings (loss) from continuing operations209 110 268 
Earnings (loss) from discontinued operations(2)(3)(5)
Net earnings (loss)207 107 263 
Earnings (loss) per common share - basic   
Continuing operations1.77 0.93 2.18 
Discontinued operations(0.02)(0.03)(0.04)
Net earnings (loss) - basic1.75 0.90 2.14 
Earnings (loss) per common share - diluted  
Continuing operations1.76 0.93 2.17 
Discontinued operations(0.01)(0.03)(0.04)
Net earnings (loss) - diluted1.75 0.90 2.13 
Weighted average shares (in millions)  
Basic118.0 118.3 122.7 
Diluted118.6 118.8 123.3 

7


Consolidated Balance Sheets - Unaudited
As of
September 30,
2020
As of
December 31,
2019
(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents615 463 
Trade receivables - third party and affiliates, net716 850 
Non-trade receivables, net347 331 
Inventories1,001 1,038 
Marketable securities35 40 
Other assets57 43 
Total current assets2,771 2,765 
Investments in affiliates993 975 
Property, plant and equipment, net3,851 3,713 
Operating lease right-of-use assets210 203 
Deferred income taxes87 96 
Other assets412 338 
Goodwill1,128 1,074 
Intangible assets, net317 312 
Total assets9,769 9,476 
LIABILITIES AND EQUITY  
Current Liabilities  
Short-term borrowings and current installments of long-term debt - third party and affiliates
958 496 
Trade payables - third party and affiliates699 780 
Other liabilities632 461 
Income taxes payable120 17 
Total current liabilities2,409 1,754 
Long-term debt, net of unamortized deferred financing costs3,140 3,409 
Deferred income taxes164 257 
Uncertain tax positions200 165 
Benefit obligations584 589 
Operating lease liabilities191 181 
Other liabilities197 223 
Commitments and Contingencies  
Stockholders' Equity  
Treasury stock, at cost(4,106)(3,846)
Additional paid-in capital248 254 
Retained earnings6,710 6,399 
Accumulated other comprehensive income (loss), net(344)(300)
Total Celanese Corporation stockholders' equity2,508 2,507 
Noncontrolling interests376 391 
Total equity2,884 2,898 
Total liabilities and equity9,769 9,476 
8
EX-99.2 3 q320208-kex992.htm EX-99.2 Document
celaneseimagea171.jpg
Exhibit 99.2
Non-US GAAP Financial Measures and Supplemental Information
October 25, 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
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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.
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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.
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Table 1
Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited
Q3 '20Q2 '20Q1 '202019Q4 '19Q3 '19Q2 '19Q1 '19
(In $ millions)
Net earnings (loss) attributable to Celanese Corporation
207 107 218 852 43 263 209 337 
(Earnings) loss from discontinued operations
(1)
Interest income(1)(1)(2)(6)(2)(1)(2)(1)
Interest expense28 27 28 115 28 27 29 31 
Refinancing expense— — — — — — 
Income tax provision (benefit)30 35 65 124 (3)53 28 46 
Certain Items attributable to Celanese Corporation (Table 8)
24 28 26 381 238 29 107 
Adjusted EBIT290 199 342 1,476 303 376 376 421 
Depreciation and amortization expense(1)
88 86 83 329 84 82 82 81 
Operating EBITDA378 285 425 1,805 387 458 458 502 
Q3 '20Q2 '20Q1 '202019Q4 '19Q3 '19Q2 '19Q1 '19
(In $ millions)
Engineered Materials— — 
Acetate Tow— — — — 
Acetyl Chain— — 10 — 
Other Activities(2)
— — — — — — — — 
Accelerated depreciation and amortization expense
23 12 
Depreciation and amortization expense(1)
88 86 83 329 84 82 82 81 
Total depreciation and amortization expense
89 87 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).
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Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited
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Q3 '20Q2 '20Q1 '202019Q4 '19Q3 '19Q2 '19Q1 '19
(In $ millions, except percentages)
Operating Profit (Loss) / Operating Margin
Engineered Materials84 16.0 %(13)(3.1)%102 18.1 %446 18.7 %88 16.3 %111 18.8 %103 17.4 %144 21.7 %
Acetate Tow30 23.3 %31 24.4 %27 20.9 %52 8.2 %22 14.9 %34 21.5 %(44)(26.8)%40 24.1 %
Acetyl Chain(1)
121 15.6 %121 18.3 %135 16.9 %678 20.0 %108 14.0 %180 20.8 %188 21.7 %202 22.7 %
Other Activities(2)
(51)(56)(70)(342)(150)(65)(61)(66)
Total
184 13.0 %83 7.0 %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)
Operating Profit (Loss) Attributable to Celanese Corporation
182 12.9 %81 6.8 %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 Materials84 16.0 %(13)(3.1)%102 18.1 %446 18.7 %88 16.3 %111 18.8 %103 17.4 %144 21.7 %
Acetate Tow30 23.3 %31 24.4 %27 20.9 %52 8.2 %22 14.9 %34 21.5 %(44)(26.8)%40 24.1 %
Acetyl Chain(1)
119 15.3 %119 18.0 %133 16.6 %672 19.8 %106 13.7 %178 20.5 %187 21.6 %201 22.6 %
Other Activities(2)
(51)(56)(70)(342)(150)(65)(61)(66)
Total182 12.9 %81 6.8 %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 Materials21 26 53 168 45 41 36 46 
Acetate Tow28 32 37 112 24 27 29 32 
Acetyl Chain— 
Other Activities(2)
— (1)
Total56 63 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 27 28 (20)(71)17 17 17 
Total28 27 28 (20)(71)17 17 17 
Certain Items Attributable to Celanese Corporation (Table 8)
Engineered Materials11 27 10 (7)
Acetate Tow104 10 86 — 
Acetyl Chain(3)50 37 11 
Other Activities(2)
220 190 11 13 
Total24 28 26 381 238 29 107 
Adjusted EBIT / Adjusted EBIT Margin
Engineered Materials116 22.1 %40 9.5 %165 29.3 %621 26.0 %136 25.2 %154 26.1 %148 25.0 %183 27.6 %
Acetate Tow59 45.7 %64 50.4 %67 51.9 %268 42.1 %54 36.5 %71 44.9 %71 43.3 %72 43.4 %
Acetyl Chain126 16.2 %116 17.5 %139 17.4 %727 21.4 %144 18.7 %191 22.0 %189 21.8 %203 22.8 %
Other Activities(2)
(11)(21)(29)(140)(31)(40)(32)(37)
Total290 20.6 %199 16.7 %342 23.4 %1,476 23.4 %303 21.2 %376 23.7 %376 23.6 %421 25.0 %
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(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).
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Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.)
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Q3 '20Q2 '20Q1 '202019Q4 '19Q3 '19Q2 '19Q1 '19
(In $ millions, except percentages)
Depreciation and Amortization Expense(1)
Engineered Materials33 32 32 127 33 32 31 31 
Acetate Tow36 10 
Acetyl Chain41 41 39 151 39 37 38 37 
Other Activities(2)
15 
Total88 86 83 329 84 82 82 81 
Operating EBITDA / Operating EBITDA Margin
Engineered Materials149 28.3 %72 17.1 %197 35.0 %748 31.3 %169 31.4 %186 31.5 %179 30.2 %214 32.3 %
Acetate Tow68 52.7 %73 57.5 %75 58.1 %304 47.8 %62 41.9 %80 50.6 %80 48.8 %82 49.4 %
Acetyl Chain167 21.5 %157 23.7 %178 22.3 %878 25.9 %183 23.7 %228 26.3 %227 26.2 %240 27.0 %
Other Activities(2)
(6)(17)(25)(125)(27)(36)(28)(34)
Total378 26.8 %285 23.9 %425 29.1 %1,805 28.7 %387 27.0 %458 28.9 %458 28.8 %502 29.8 %
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(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).
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Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
Q3 '20Q2 '20Q1 '202019Q4 '19Q3 '19Q2 '19Q1 '19
per shareper shareper shareper shareper shareper shareper shareper share
(In $ millions, except per share data)
Earnings (loss) from continuing operations attributable to Celanese Corporation
209 1.76 110 0.93 225 1.88 858 6.89 42 0.35 268 2.17 210 1.67 338 2.64 
Income tax provision (benefit)
30 35 65 124 (3)53 28 46 
Earnings (loss) from continuing operations before tax