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Celanese Corporation Reports Second Quarter 2023 Earnings

Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today reported second quarter 2023 GAAP diluted earnings per share of $2.00 and adjusted earnings per share of $2.17. The Company generated net sales of $2.8 billion in the quarter, a decrease of 2 percent from the prior quarter, reflecting a sequential decrease in pricing of 4 percent partially offset by a sequential increase in volume of 2 percent. The Company reported second quarter consolidated operating profit of $335 million, adjusted EBIT of $444 million, and operating EBITDA of $616 million, sequential increases of 33, 5, and 3 percent, respectively.

The Company initiated incremental actions to reduce cost, align production and inventory levels with demand, and maximize cash generation in response to continued demand softness, destocking across certain end-markets, and heightened competitive dynamics. As a result, the Company:

  • Reduced inventory balances by $235 million in the second quarter with inventory reductions across Engineered Materials and the Acetyl Chain of 10 percent and 5 percent, respectively;
  • Generated second quarter operating cash flow of $762 million and free cash flow of $611 million, all-time records by $132 million and $91 million, respectively; and
  • Reduced net debt by $515 million in the second quarter, including a $386 million sequential decrease in debt and a $129 million sequential increase in cash.

"While we continue to navigate a persistently soft demand environment and volatile competitive backdrop, our team executed incremental actions that enabled us to deliver sequential earnings growth and record cash generation in the second quarter," said Lori Ryerkerk, chair and chief executive officer. "Our priority is to continue to maximize cash generation and I thank our team for exceeding our working capital reduction target in the second quarter to support free cash flow that was 18 percent higher than any quarter in our history. With strong free cash flow and anticipated net proceeds of approximately $450 million from the Food Ingredients joint venture, I am confident that we will meaningfully exceed the full year objective to reduce net debt by $1 billion in 2023."

Second Quarter 2023 Financial Highlights:

 

Three Months Ended

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

(unaudited)

 

(In $ millions, except per share data)

Net Sales

 

 

 

 

 

Engineered Materials

 

1,585

 

 

 

1,630

 

 

 

948

 

Acetyl Chain

 

1,233

 

 

 

1,250

 

 

 

1,559

 

Intersegment Eliminations

 

(23

)

 

 

(27

)

 

 

(21

)

Total

 

2,795

 

 

 

2,853

 

 

 

2,486

 

 

 

 

 

 

 

Operating Profit (Loss)

 

 

 

 

 

Engineered Materials

 

158

 

 

 

112

 

 

 

166

 

Acetyl Chain

 

295

 

 

 

278

 

 

 

428

 

Other Activities

 

(118

)

 

 

(139

)

 

 

(111

)

Total

 

335

 

 

 

251

 

 

 

483

 

 

 

 

 

 

 

Net Earnings (Loss)

 

221

 

 

 

93

 

 

 

436

 

 

 

 

 

 

 

Adjusted EBIT(1)

 

 

 

 

 

Engineered Materials

 

205

 

 

 

215

 

 

 

224

 

Acetyl Chain

 

332

 

 

 

316

 

 

 

475

 

Other Activities

 

(93

)

 

 

(107

)

 

 

(53

)

Total

 

444

 

 

 

424

 

 

 

646

 

 

 

 

 

 

 

Equity Earnings and Dividend Income, Other Income (Expense)

 

 

 

 

 

Engineered Materials

 

20

 

 

 

10

 

 

 

53

 

Acetyl Chain

 

32

 

 

 

34

 

 

 

39

 

 

 

 

 

 

 

Operating EBITDA(1)

 

616

 

 

 

596

 

 

 

744

 

Diluted EPS - continuing operations

$

2.00

 

 

$

0.86

 

 

$

4.03

 

Diluted EPS - total

$

2.01

 

 

$

0.83

 

 

$

3.98

 

Adjusted EPS(1)

$

2.17

 

 

$

2.01

 

 

$

4.99

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

 

(163

)

 

 

(178

)

 

 

(136

)

Net cash provided by (used in) financing activities

 

(447

)

 

 

(69

)

 

 

(159

)

Net cash provided by (used in) operating activities

 

762

 

 

 

(96

)

 

 

495

 

Free cash flow(1)

 

611

 

 

 

(261

)

 

 

368

 

____________________________

(1)

See "Non-US GAAP Financial Measures" below.

Recent Highlights:

  • Announced the signing of a definitive agreement with finalized terms and value for the Food Ingredients joint venture, Nutrinova. Mitsui & Co., Ltd. will acquire a 70 percent stake at a purchase price of $472.5 million representing an enterprise valuation of approximately 15 times 2022 EBITDA.
  • Awarded the 2023 Manufacturing Leadership Award by the Manufacturing Leadership Council and the National Association of Manufacturers for the Company's efforts to deploy a private 5G network at its Clear Lake, Texas facility to enable its strategic initiative of creating the digital plant of the future.
  • Received the U.S. Environmental Protection Agency ENERGY STAR Award 2023 Partner of the Year designation for the eighth consecutive year and the Sustained Excellence designation, the highest honor of the ENERGY STAR Awards, for the sixth consecutive year.

Second Quarter 2023 Business Segment Overview

Acetyl Chain

The Acetyl Chain delivered second quarter net sales of $1.2 billion, a 1 percent decrease from the prior quarter. Volume increased by 2 percent sequentially and decreased 2 percent from the same quarter last year due to muted seasonal recovery in demand and residual destocking in certain end-markets. Second quarter pricing across the Acetyl Chain decreased by 3 percent sequentially and 19 percent year over year as a result of lower global industry utilization due to demand. In response to the challenging environment, the business took decisive actions to exercise its commercial and supply chain optionality. The Acetyl Chain reliably supplied an incremental share of volume during second quarter industry turnarounds to offset a portion of macro demand softness. Additionally, the business directed more of its sales into downstream derivatives where stronger margins could be captured. The business continued to align its production and inventory to current demand conditions by reducing production rates at its highest cost facilities and delivering a second quarter inventory reduction of $29 million. As a result of these actions, the Acetyl Chain delivered sequential earnings growth with second quarter operating profit of $295 million, adjusted EBIT of $332 million, and operating EBITDA of $386 million at margins of 24, 27, and 31 percent, respectively. Through the first half of 2023, the Acetyl Chain has performed in line with foundational earnings guidance despite market conditions that remain sub-foundational.

Engineered Materials

Engineered Materials reported second quarter net sales of $1.6 billion, a sequential decrease of 3 percent, due to a 5 percent price decrease that offset a 2 percent volume increase. Pricing reflected poor demand conditions across several differentiated end-markets and continued destocking, which resulted in intensified industry competitive dynamics. In response, Engineered Materials took actions to reduce production rates at higher cost facilities and directed sales into alternative end-markets. By leveraging its broad customer base, the business offset sequential demand deterioration in certain end-markets to deliver sequential volume growth in aggregate. In support of free cash flow, the business reduced inventory by $207 million in the second quarter, which resulted in an unfavorable impact to earnings. Engineered Materials delivered second quarter operating profit of $158 million, adjusted EBIT of $205 million, and operating EBITDA of $317 million at margins of 10, 13, and 20 percent, respectively. The Mobility and Materials (M&M) contribution to EM earnings increased sequentially through volume growth and $11 million in incremental synergies delivered across the quarter.

Cash Flow and Tax

Celanese reported second quarter operating cash flow of $762 million and free cash flow of $611 million which included cash capital expenditures of $145 million. Celanese returned $76 million in cash to shareholders via dividends in the quarter.

The effective income tax rate was a benefit of 2 percent for the second quarter compared to an expense of 20 percent for the same quarter in 2022. The lower effective rate was primarily due to decreased earnings in high taxed jurisdictions related to current demand conditions and a decrease in valuation allowances on U.S. foreign tax credit carryforwards due to revised forecasts of foreign sourced income and expenses during the carryforward period. The effective tax rate for adjusted earnings was 12 percent based on expected jurisdictional earnings mix for the full year and consideration of other non-recurring U.S. GAAP items.

Outlook

"The current demand and competitive backdrop remains volatile and unpredictable," said Lori Ryerkerk. "We are executing on incremental actions to position our commercial teams in a fluid sales environment, align our production and inventory levels with current demand, aggressively reduce costs, and maximize cash generation. We expect contributions from these actions will support strong 2023 cash generation and continued earnings growth across the second half."

Reflective of controllable actions and improvement in destocking conditions across the remainder of the year, the Company anticipates third quarter adjusted earnings per share of $2.00 to $2.50, inclusive of approximately $0.30 per share of M&M transaction amortization. Likewise, Celanese anticipates full year adjusted earnings per share of $9.00 to $10.00, inclusive of approximately $1.20 per share of M&M transaction amortization.

Reconciliations of forecasted non-GAAP measures such as adjusted earnings per share, adjusted EBIT or free cash flow to the equivalent U.S. GAAP measures (diluted earnings per share, net earnings (loss) attributable to Celanese Corporation and net cash provided by (used in) operations, respectively), are not available without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, and other items is not practical. For more information, see "Non-GAAP Financial Measures" below.

The Company's prepared remarks related to the second quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library on August 7, 2023. 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.

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 13,000 employees worldwide and had 2022 net sales of $9.7 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, cash flow, financial performance, synergies, 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; volatility or changes in the price and availability of raw materials and energy, 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 length and depth of product and industry business cycles, particularly in the automotive, electrical, mobility, textiles, medical, electronics and construction industries; the ability to pass increases in raw material prices, logistics costs and other costs on to customers or otherwise improve margins through price increases; the accuracy or inaccuracy of our beliefs or assumptions regarding anticipated benefits of the acquisition (the "M&M Acquisition") by us of the majority of the Mobility & Materials business (the "M&M Business") of DuPont de Nemours, Inc.; the possibility that we will not be able to realize all of the anticipated improvements in the M&M Business's financial performance — including optimizing pricing, currency mix and inventory — or realize all of the anticipated benefits of the M&M Acquisition, including synergies and growth opportunities, within the anticipated timeframe, or at all, whether as a result of difficulties arising from the operation or integration of the M&M Business or other unanticipated delays, costs, inefficiencies or liabilities; increased commercial, legal or regulatory complexity of entering into, or expanding our exposure to, certain end markets and geographies; risks in the global economy and equity and credit markets and their potential impact on our ability to pay down debt in the future and/or refinance at suitable rates, in a timely manner, or at all; diversion of management's attention from ongoing business operations and opportunities and other disruption caused by the M&M Acquisition and the integration processes and their impact on our existing business and relationships; risks and costs associated with increased leverage from the M&M Acquisition, including increased interest expense and potential reduction of business and strategic flexibility; the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance; the ability to reduce or maintain their current levels of production costs and to improve productivity by implementing technological improvements to existing plants; increased price competition and the introduction of competing products by other companies; the ability to identify desirable potential acquisition or divestiture opportunities and to complete such transactions, including obtaining regulatory approvals, consistent with the Company's strategy; market acceptance of our products and technology; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, transportation, logistics or supply chain disruptions, cybersecurity 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 (such as the Russia-Ukraine conflict) or terrorist incidents or as a result of weather, natural disasters, or other crises; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not limited to, adjustments, changes in estimates or interpretations or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in the United States and other jurisdictions; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change or other sustainability matters; potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, 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; tax rates and changes thereto; our ability to obtain regulatory approval for, and satisfy closing conditions to, any transactions described herein that have not closed; and various other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Non-GAAP Financial Measures

Presentation

This document presents the Company's two business segments, Engineered Materials and the 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, operating EBITDA margin, 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 operating EBITDA 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. Operating EBITDA margin is defined by the Company as operating EBITDA divided by net sales.
  • 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 net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for contributions from or distributions to our noncontrolling interest joint ventures. We do not provide reconciliations for free cash flow 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 items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, 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.

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 August 7, 2023 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

 

June 30,

2023

 

March 31,

2023

 

June 30,

2022

 

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

Net sales

2,795

 

 

2,853

 

 

2,486

 

Cost of sales

(2,109

)

 

(2,222

)

 

(1,781

)

Gross profit

686

 

 

631

 

 

705

 

Selling, general and administrative expenses

(274

)

 

(285

)

 

(197

)

Amortization of intangible assets

(42

)

 

(41

)

 

(11

)

Research and development expenses

(40

)

 

(42

)

 

(26

)

Other (charges) gains, net

(10

)

 

(23

)

 

1

 

Foreign exchange gain (loss), net

15

 

 

6

 

 

(1

)

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

 

 

5

 

 

12

 

Operating profit (loss)

335

 

 

251

 

 

483

 

Equity in net earnings (loss) of affiliates

23

 

 

15

 

 

60

 

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

(2

)

 

1

 

 

25

 

Interest expense

(182

)

 

(182

)

 

(48

)

Interest income

7

 

 

8

 

 

1

 

Dividend income - equity investments

31

 

 

34

 

 

36

 

Other income (expense), net

4

 

 

(6

)

 

(3

)

Earnings (loss) from continuing operations before tax

216

 

 

121

 

 

554

 

Income tax (provision) benefit

4

 

 

(25

)

 

(112

)

Earnings (loss) from continuing operations

220

 

 

96

 

 

442

 

Earnings (loss) from operation of discontinued operations

 

 

(3

)

 

(8

)

Income tax (provision) benefit from discontinued operations

1

 

 

 

 

2

 

Earnings (loss) from discontinued operations

1

 

 

(3

)

 

(6

)

Net earnings (loss)

221

 

 

93

 

 

436

 

Net (earnings) loss attributable to noncontrolling interests

(1

)

 

(2

)

 

(2

)

Net earnings (loss) attributable to Celanese Corporation

220

 

 

91

 

 

434

 

Amounts attributable to Celanese Corporation

 

 

 

 

 

Earnings (loss) from continuing operations

219

 

 

94

 

 

440

 

Earnings (loss) from discontinued operations

1

 

 

(3

)

 

(6

)

Net earnings (loss)

220

 

 

91

 

 

434

 

Earnings (loss) per common share - basic

 

 

 

 

 

Continuing operations

2.01

 

 

0.87

 

 

4.06

 

Discontinued operations

0.01

 

 

(0.03

)

 

(0.06

)

Net earnings (loss) - basic

2.02

 

 

0.84

 

 

4.00

 

Earnings (loss) per common share - diluted

 

 

 

 

 

Continuing operations

2.00

 

 

0.86

 

 

4.03

 

Discontinued operations

0.01

 

 

(0.03

)

 

(0.05

)

Net earnings (loss) - diluted

2.01

 

 

0.83

 

 

3.98

 

Weighted average shares (in millions)

 

 

 

 

 

Basic

108.9

 

 

108.6

 

 

108.4

 

Diluted

109.3

 

 

109.2

 

 

109.1

 

Consolidated Balance Sheets - Unaudited

 

As of

June 30,

2023

 

As of

December 31,

2022

 

 

(In $ millions)

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

1,296

 

 

1,508

 

Trade receivables - third party and affiliates, net

1,338

 

 

1,379

 

Non-trade receivables, net

625

 

 

675

 

Inventories

2,514

 

 

2,808

 

Assets held for sale

211

 

 

 

Other assets

268

 

 

241

 

Total current assets

6,252

 

 

6,611

 

Investments in affiliates

1,028

 

 

1,062

 

Property, plant and equipment, net

5,541

 

 

5,584

 

Operating lease right-of-use assets

403

 

 

413

 

Deferred income taxes

832

 

 

808

 

Other assets

523

 

 

547

 

Goodwill

7,063

 

 

7,142

 

Intangible assets, net

4,007

 

 

4,105

 

Total assets

25,649

 

 

26,272

 

LIABILITIES AND EQUITY

 

 

 

Current Liabilities

 

 

 

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

1,507

 

 

1,306

 

Trade payables - third party and affiliates

1,243

 

 

1,518

 

Liabilities held for sale

19

 

 

 

Other liabilities

1,146

 

 

1,201

 

Income taxes payable

7

 

 

43

 

Total current liabilities

3,922

 

 

4,068

 

Long-term debt, net of unamortized deferred financing costs

12,889

 

 

13,373

 

Deferred income taxes

1,220

 

 

1,242

 

Uncertain tax positions

285

 

 

322

 

Benefit obligations

406

 

 

411

 

Operating lease liabilities

347

 

 

364

 

Other liabilities

492

 

 

387

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Treasury stock, at cost

(5,490

)

 

(5,491

)

Additional paid-in capital

383

 

 

372

 

Retained earnings

11,433

 

 

11,274

 

Accumulated other comprehensive income (loss), net

(702

)

 

(518

)

Total Celanese Corporation stockholders' equity

5,624

 

 

5,637

 

Noncontrolling interests

464

 

 

468

 

Total equity

6,088

 

 

6,105

 

Total liabilities and equity

25,649

 

 

26,272

 

Non-US GAAP Financial Measures and Supplemental Information

August 7, 2023

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 two business segments, Engineered Materials and the 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 contributions from or distributions to our NCI joint ventures. 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. Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain debt service and finance lease payments that are not deducted from that measure. We do not provide reconciliations for free cash flow on a forward-looking basis 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 items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, 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.
  • 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. 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

Celanese Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

220

 

 

91

 

 

1,894

 

 

767

 

 

191

 

 

434

 

 

502

 

(Earnings) loss from discontinued operations

(1

)

 

3

 

 

8

 

 

1

 

 

1

 

 

6

 

 

 

Interest income

(7

)

 

(8

)

 

(69

)

 

(33

)

 

(34

)

 

(1

)

 

(1

)

Interest expense

182

 

 

182

 

 

405

 

 

168

 

 

154

 

 

48

 

 

35

 

Income tax provision (benefit)

(4

)

 

25

 

 

(489

)

 

(840

)

 

127

 

 

112

 

 

112

 

Certain Items attributable to Celanese Corporation (Table 8)

54

 

 

131

 

 

422

 

 

239

 

 

71

 

 

47

 

 

65

 

Adjusted EBIT

444

 

 

424

 

 

2,171

 

 

302

 

 

510

 

 

646

 

 

713

 

Depreciation and amortization expense(1)

172

 

 

172

 

 

446

 

 

151

 

 

97

 

 

98

 

 

100

 

Operating EBITDA

616

 

 

596

 

 

2,617

 

 

453

 

 

607

 

 

744

 

 

813

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions)

Engineered Materials

 

 

13

 

2

 

3

 

4

 

4

Acetyl Chain

 

 

 

 

2

 

 

 

 

 

 

 

 

2

 

Other Activities(2)

 

 

 

 

1

 

 

 

 

 

 

1

 

 

 

Accelerated depreciation and amortization expense

 

 

 

 

16

 

 

2

 

 

3

 

 

5

 

 

6

 

Depreciation and amortization expense(1)

172

 

 

172

 

 

446

 

 

151

 

 

97

 

 

98

 

 

100

 

Total depreciation and amortization expense

172

 

 

172

 

 

462

 

 

153

 

 

100

 

 

103

 

 

106

 

______________________________

(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, 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 1a

M&M Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited

 

 

Q2 '23

 

Q1 '23

 

Q4 '22

 

(In $ millions)

Net earnings (loss) attributable to M&M

47

 

 

(48

)

 

(69

)

(3)

Income tax provision (benefit)

(1

)

 

13

 

 

6

 

Certain Items(1)

18

 

 

86

 

 

72

 

Adjusted EBIT

64

 

 

51

 

 

9

 

Depreciation and amortization expense

68

 

 

68

 

 

47

 

Operating EBITDA(2)

132

 

 

119

 

 

56

 

(4)

______________________________

(1)

Amount is included within total Certain Items shown in Table 8.

(2)

Excludes $(23) million, $(23) million and $(17) million of Operating EBITDA included in Other Activities for the three months ended June 30, 2023, March 31, 2023 and December 31, 2022, respectively.

(3)

Excludes $30 million of Net loss for the month ended October 31, 2022, prior to our acquisition of the majority of the Mobility & Materials business ("M&M Business") of DuPont de Nemours, Inc.

(4)

Excludes $22 million of Operating EBITDA for the month ended October 31, 2022, prior to our acquisition of the M&M Business.

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

158

 

 

10.0

%

 

112

 

 

6.9

%

 

429

 

 

10.7

%

 

25

 

 

2.0

%

 

114

 

 

12.3

%

 

166

 

 

17.5

%

 

124

 

 

13.6

%

Acetyl Chain

295

 

 

23.9

%

 

278

 

 

22.2

%

 

1,447

 

 

25.2

%

 

204

 

 

18.0

%

 

312

 

 

22.3

%

 

428

 

 

27.5

%

 

503

 

 

30.4

%

Other Activities(1)

(118

)

 

 

 

(139

)

 

 

 

(498

)

 

 

 

(173

)

 

 

 

(118

)

 

 

 

(111

)

 

 

 

(96

)

 

 

Total

335

 

 

12.0

%

 

251

 

 

8.8

%

 

1,378

 

 

14.2

%

 

56

 

 

2.4

%

 

308

 

 

13.4

%

 

483

 

 

19.4

%

 

531

 

 

20.9

%

Less: Net Earnings (Loss) Attributable to NCI for Engineered Materials

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less: Net Earnings (Loss) Attributable to NCI for Acetyl Chain

3

 

 

 

 

2

 

 

 

 

8

 

 

 

 

2

 

 

 

 

2

 

 

 

 

2

 

 

 

 

2

 

 

 

Operating Profit (Loss) Attributable to Celanese Corporation

334

 

 

11.9

%

 

249

 

 

8.7

%

 

1,370

 

 

14.2

%

 

54

 

 

2.3

%

 

306

 

 

13.3

%

 

481

 

 

19.3

%

 

529

 

 

20.8

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

160

 

 

10.1

%

 

112

 

 

6.9

%

 

429

 

 

10.7

%

 

25

 

 

2.0

%

 

114

 

 

12.3

%

 

166

 

 

17.5

%

 

124

 

 

13.6

%

Acetyl Chain

292

 

 

23.7

%

 

276

 

 

22.1

%

 

1,439

 

 

25.1

%

 

202

 

 

17.8

%

 

310

 

 

22.2

%

 

426

 

 

27.3

%

 

501

 

 

30.3

%

Other Activities(1)

(118

)

 

 

 

(139

)

 

 

 

(498

)

 

 

 

(173

)

 

 

 

(118

)

 

 

 

(111

)

 

 

 

(96

)

 

 

Total

334

 

 

11.9

%

 

249

 

 

8.7

%

 

1,370

 

 

14.2

%

 

54

 

 

2.3

%

 

306

 

 

13.3

%

 

481

 

 

19.3

%

 

529

 

 

20.8

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

20

 

 

 

 

10

 

 

 

 

207

 

 

 

 

35

 

 

 

 

70

 

 

 

 

53

 

 

 

 

49

 

 

 

Acetyl Chain

32

 

 

 

 

34

 

 

 

 

143

 

 

 

 

30

 

 

 

 

34

 

 

 

 

39

 

 

 

 

40

 

 

 

Other Activities(1)

6

 

 

 

 

(1

)

 

 

 

12

 

 

 

 

1

 

 

 

 

4

 

 

 

 

1

 

 

 

 

6

 

 

 

Total

58

 

 

 

 

43

 

 

 

 

362

 

 

 

 

66

 

 

 

 

108

 

 

 

 

93

 

 

 

 

95

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acetyl Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Activities(1)

(2

)

 

 

 

1

 

 

 

 

17

 

 

 

 

(57

)

 

 

 

25

 

 

 

 

25

 

 

 

 

24

 

 

 

Total

(2

)

 

 

 

1

 

 

 

 

17

 

 

 

 

(57

)

 

 

 

25

 

 

 

 

25

 

 

 

 

24

 

 

 

Certain Items Attributable to Celanese Corporation (Table 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

25

 

 

 

 

93

 

 

 

 

143

 

 

 

 

78

 

 

 

 

22

 

 

 

 

5

 

 

 

 

38

 

 

 

Acetyl Chain

8

 

 

 

 

6

 

 

 

 

27

 

 

 

 

10

 

 

 

 

5

 

 

 

 

10

 

 

 

 

2

 

 

 

Other Activities(1)

21

 

 

 

 

32

 

 

 

 

252

 

 

 

 

151

 

 

 

 

44

 

 

 

 

32

 

 

 

 

25

 

 

 

Total

54

 

 

 

 

131

 

 

 

 

422

 

 

 

 

239

 

 

 

 

71

 

 

 

 

47

 

 

 

 

65

 

 

 

Adjusted EBIT / Adjusted EBIT Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

205

 

 

12.9

%

 

215

 

 

13.2

%

 

779

 

 

19.4

%

 

138

 

 

11.2

%

 

206

 

 

22.2

%

 

224

 

 

23.6

%

 

211

 

 

23.2

%

Acetyl Chain

332

 

 

26.9

%

 

316

 

 

25.3

%

 

1,609

 

 

28.0

%

 

242

 

 

21.3

%

 

349

 

 

25.0

%

 

475

 

 

30.5

%

 

543

 

 

32.9

%

Other Activities(1)

(93

)

 

 

 

(107

)

 

 

 

(217

)

 

 

 

(78

)

 

 

 

(45

)

 

 

 

(53

)

 

 

 

(41

)

 

 

Total

444

 

 

15.9

%

 

424

 

 

14.9

%

 

2,171

 

 

22.4

%

 

302

 

 

12.9

%

 

510

 

 

22.2

%

 

646

 

 

26.0

%

 

713

 

 

28.1

%

___________________________

(1)

Other Activities includes corporate SG&A expenses, 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.)
 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

112

 

 

 

 

112

 

 

 

 

213

 

 

 

 

90

 

 

 

 

40

 

 

 

 

41

 

 

 

 

42

 

 

 

Acetyl Chain

54

 

 

 

 

54

 

 

 

 

211

 

 

 

 

52

 

 

 

 

53

 

 

 

 

52

 

 

 

 

54

 

 

 

Other Activities(2)

6

 

 

 

 

6

 

 

 

 

22

 

 

 

 

9

 

 

 

 

4

 

 

 

 

5

 

 

 

 

4

 

 

 

Total

172

 

 

 

 

172

 

 

 

 

446

 

 

 

 

151

 

 

 

 

97

 

 

 

 

98

 

 

 

 

100

 

 

 

Operating EBITDA / Operating EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

317

 

 

20.0

%

 

327

 

 

20.1

%

 

992

 

 

24.7

%

 

228

 

 

18.4

%

 

246

 

 

26.5

%

 

265

 

 

28.0

%

 

253

 

 

27.8

%

Acetyl Chain

386

 

 

31.3

%

 

370

 

 

29.6

%

 

1,820

 

 

31.7

%

 

294

 

 

25.9

%

 

402

 

 

28.8

%

 

527

 

 

33.8

%

 

597

 

 

36.1

%

Other Activities(2)

(87

)

 

 

 

(101

)

 

 

 

(195

)

 

 

 

(69

)

 

 

 

(41

)

 

 

 

(48

)

 

 

 

(37

)

 

 

Total

616

 

 

22.0

%

 

596

 

 

20.9

%

 

2,617

 

 

27.1

%

 

453

 

 

19.3

%

 

607

 

 

26.4

%

 

744

 

 

29.9

%

 

813

 

 

32.0

%

___________________________

(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, 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

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

 

 

per share

 

 

 

per share

 

 

 

per share

 

 

 

per share

 

 

 

per share

 

 

 

per share

 

 

 

per share

 

(In $ millions, except per share data)

Earnings (loss) from continuing operations attributable to Celanese Corporation

219

 

 

2.00

 

94

 

 

0.86

 

1,902

 

 

17.41

 

768

 

 

7.03

 

192

 

 

1.76

 

440

 

 

4.03

 

502

 

 

4.61

Income tax provision (benefit)

(4

)

 

 

 

25

 

 

 

 

(489

)

 

 

 

(840

)

 

 

 

127

 

 

 

 

112

 

 

 

 

112

 

 

 

Earnings (loss) from continuing operations before tax

215

 

 

 

 

119

 

 

 

 

1,413

 

 

 

 

(72

)

 

 

 

319

 

 

 

 

552

 

 

 

 

614

 

 

 

Certain Items attributable to Celanese Corporation (Table 8)

54

 

 

 

 

131

 

 

 

 

422

 

 

 

 

239

 

 

 

 

71

 

 

 

 

47

 

 

 

 

65

 

 

 

Refinancing and related expenses

 

 

 

 

 

 

158

 

(1)

 

 

14

 

(1)

 

 

104

 

(1)

 

 

26

 

(1)

 

 

14

 

(1)

 

Adjusted earnings (loss) from continuing operations before tax

269

 

 

 

 

250

 

 

 

 

1,993

 

 

 

 

181

 

 

 

 

494

 

 

 

 

625

 

 

 

 

693

 

 

 

Income tax (provision) benefit on adjusted earnings(2)

(32

)

 

 

 

(30

)

 

 

 

(259

)

 

 

 

(24

)

 

 

 

(64

)

 

 

 

(81

)

 

 

 

(90

)

 

 

Adjusted earnings (loss) from continuing operations(3)

237

 

 

2.17

 

220

 

 

2.01

 

1,734

 

 

15.88

 

157

 

 

1.44

 

430

 

 

3.94

 

544

 

 

4.99

 

603

 

 

5.54

 

Diluted shares (in millions)(4)

Weighted average shares outstanding

108.9

 

 

 

 

108.6

 

 

 

 

108.4

 

 

 

 

108.5

 

 

 

 

108.4

 

 

 

 

108.4

 

 

 

 

108.2

 

 

 

Incremental shares attributable to equity awards

0.4

 

 

 

 

0.6

 

 

 

 

0.8

 

 

 

 

0.7

 

 

 

 

0.7

 

 

 

 

0.7

 

 

 

 

0.7

 

 

 

Total diluted shares

109.3

 

 

 

 

109.2

 

 

 

 

109.2

 

 

 

 

109.2

 

 

 

 

109.1

 

 

 

 

109.1

 

 

 

 

108.9

 

 

 

______________________________

(1)

Includes net interest expense and certain fees related to debt issued as part of our acquisition of the M&M Business.

(2)

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

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

 

Adjusted effective tax rate

12

 

 

 

12

 

 

 

13

 

 

 

13

 

 

 

13

 

 

 

13

 

 

 

13

 

 

 

(3)

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)

2022

 

(18.4)

 

5.4

(4)

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

 

 

2023

 

2022

 

 

(In percentages)

 

US GAAP annual effective tax rate

7

 

 

(34

)

 

Discrete quarterly recognition of GAAP items(1)

1

 

 

(6

)

 

Tax impact of other charges and adjustments(2)

4

 

 

9

 

 

Utilization of foreign tax credits

(1

)

 

 

 

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

 

 

(1

)

 

Other, includes effect of discrete current year transactions(4)

1

 

 

45

 

(5)

Adjusted tax rate

12

 

 

13

 

 

______________________________

Note: As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate for actual results.

(1)

Such as changes in tax laws (including US tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.

(2)

Reflects the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes.

(3)

Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.

(4)

Includes tax impacts related to full-year forecasted tax opportunities and related costs.

(5)

Includes the reversal of certain U.S. GAAP deferred tax benefits in 2022 related to non-recurring internal restructuring transactions related to the M&M acquisition, to centralize ownership of intellectual property with the business and to facilitate future deployment of cash to service acquisition indebtedness. Certain benefits of the internal restructuring will be realized in future periods for adjusted earnings purposes.

Table 4

Net Sales by Segment - Unaudited

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions)

Engineered Materials

1,585

 

 

1,630

 

 

4,024

 

 

1,237

 

 

929

 

 

948

 

 

910

 

Acetyl Chain

1,233

 

 

1,250

 

 

5,743

 

 

1,135

 

 

1,397

 

 

1,559

 

 

1,652

 

Intersegment eliminations(1)

(23

)

 

(27

)

 

(94

)

 

(24

)

 

(25

)

 

(21

)

 

(24

)

Net sales

2,795

 

 

2,853

 

 

9,673

 

 

2,348

 

 

2,301

 

 

2,486

 

 

2,538

 

___________________________

(1)

Includes intersegment sales primarily related to the Acetyl Chain.

Table 4a

Factors Affecting Segment Net Sales Sequentially - Unaudited

Three Months Ended June 30, 2023 Compared to Three Months Ended March 31, 2023

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

2

 

(5

)

 

 

(3

)

 

Acetyl Chain

2

 

 

(3

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

Total Company

2

 

 

(4

)

 

 

(2

)

 

Three Months Ended March 31, 2023 Compared to Three Months Ended December 31, 2022

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

34

 

(4

)

 

2

 

32

 

Acetyl Chain

10

 

 

(2

)

 

2

 

 

10

 

 

 

 

 

 

 

 

 

 

 

Total Company

19

 

 

(4

)

 

2

 

 

17

 

 

Three Months Ended December 31, 2022 Compared to Three Months Ended September 30, 2022

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

34

 

 

(1

)

 

 

33

 

(1) 

Acetyl Chain

(9

)

 

(10

)

 

 

(19

)

 

 

 

 

 

 

 

 

 

 

Total Company

8

 

 

(6

)

 

 

2

 

 

Three Months Ended September 30, 2022 Compared to Three Months Ended June 30, 2022

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

(1

)

 

2

 

 

(3

)

 

(2

)

 

Acetyl Chain

(3

)

 

(5

)

 

(2

)

 

(10

)

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

(3

)

 

(2

)

 

(7

)

 

________________________

(1)

2022 includes the effect of the acquisition of the majority of the M&M Business.

Three Months Ended June 30, 2022 Compared to Three Months Ended March 31, 2022

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

1

 

 

6

 

(3

)

 

4

 

 

Acetyl Chain

(6

)

 

2

 

 

(2

)

 

(6

)

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

2

 

 

(2

)

 

(2

)

 

Three Months Ended March 31, 2022 Compared to Three Months Ended December 31, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

23

 

7

 

 

(1

)

 

29

 

Acetyl Chain

7

 

 

(3

)

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

Total Company

12

 

 

1

 

 

(1

)

 

12

 

 

Table 4b

Factors Affecting Segment Net Sales Year Over Year - Unaudited

Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

75

 

 

(8

)

 

 

67

 

 

Acetyl Chain

(2

)

 

(19

)

 

 

(21

)

 

 

 

 

 

 

 

 

 

 

Total Company

27

 

(15

)

12

 

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

 
         

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

80

 

 

2

 

 

(3

)

 

79

 

 

Acetyl Chain

(9

)

 

(13

)

 

(2

)

 

(24

)

 

 

 

 

 

 

 

 

 

 

Total Company

23

 

 

(8

)

 

(3

)

 

12

 

 

Three Months Ended December 31, 2022 Compared to Three Months Ended December 31, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

67

 

 

17

 

 

(9

)

 

75

 

 

Acetyl Chain

(12

)

 

(14

)

 

(3

)

 

(29

)

 

 

 

 

 

 

 

 

 

 

Total Company

13

 

 

(5

)

 

(5

)

 

3

 

 

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

23

 

 

25

 

(12

)

 

36

 

 

Acetyl Chain

(10

)

 

2

 

 

(5

)

 

(13

)

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

9

 

 

(5

)

 

2

 

Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

24

 

 

24

 

(9

)

 

39

 

Acetyl Chain

(5

)

 

11

 

 

(4

)

 

2

 

 

 

 

 

 

 

 

 

 

 

Total Company

3

 

 

14

 

 

(4

)

 

13

 

 

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

20

 

25

 

(4

)

 

41

 

Acetyl Chain

7

 

 

38

 

 

(3

)

 

42

 

 

 

 

 

 

 

 

 

 

 

Total Company

12

 

 

32

 

 

(3

)

 

41

 

 

Table 4c

Factors Affecting Segment Net Sales Year Over Year - Unaudited

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

 
   

 

Volume

 

Price

 

Currency

 

Total

 

 

(In percentages)

 

Engineered Materials

33

 

 

23

 

(8

)

 

48

 

 

Acetyl Chain

(6

)

 

6

 

 

(3

)

 

(3

)

 

 

 

 

 

 

 

 

 

 

Total Company

6

 

 

11

 

 

(4

)

 

13

 

 

Table 5

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

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions, except percentages)

Net cash provided by (used in) investing activities

(163

)

 

(178

)

 

(11,141

)

 

(10,713

)

 

(143

)

 

(136

)

 

(149

)

Net cash provided by (used in) financing activities

(447

)

 

(69

)

 

10,290

 

 

1,944

 

 

8,600

 

 

(159

)

 

(95

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

762

 

 

(96

)

 

1,819

 

 

541

 

 

467

 

 

495

 

 

316

 

Capital expenditures on property, plant and equipment

(145

)

 

(164

)

 

(543

)

 

(143

)

 

(139

)

 

(124

)

 

(137

)

Contributions from/(Distributions) to NCI

(6

)

 

(1

)

 

(13

)

 

(3

)

 

(3

)

 

(3

)

 

(4

)

Free cash flow(1)

611

 

 

(261

)

 

1,263

 

 

395

 

 

325

 

 

368

 

 

175

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

2,795

 

 

2,853

 

 

9,673

 

 

2,348

 

 

2,301

 

 

2,486

 

 

2,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow as % of Net sales

21.9

%

 

(9.1

)%

 

13.1

%

 

16.8

%

 

14.1

%

 

14.8

%

 

6.9

%

______________________________

(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 contributions from or distributions to our NCI joint ventures.

Table 6

Cash Dividends Received - Unaudited

 

 

Q2 '23

 

Q1 '23

 

2022

 

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions)

Dividends from equity method investments

25

40

 

217

 

82

 

27

 

82

 

26

Dividends from equity investments without readily determinable fair values

31

 

 

34

 

 

133

 

 

30

 

 

30

 

 

36

 

 

37

 

Total

56

 

 

74

 

 

350

 

 

112

 

 

57

 

 

118

 

 

63

 

Table 7

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

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

(In $ millions)

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

1,507

 

 

1,386

 

 

1,306

 

 

1,306

 

 

977

 

 

809

 

 

860

 

Long-term debt, net of unamortized deferred financing costs

12,889

 

 

13,396

 

 

13,373

 

 

13,373

 

 

11,360

 

 

3,022

 

 

3,132

 

Total debt

14,396

 

 

14,782

 

 

14,679

 

 

14,679

 

 

12,337

 

 

3,831

 

 

3,992

 

Cash and cash equivalents

(1,296

)

 

(1,167

)

 

(1,508

)

 

(1,508

)

 

(9,671

)

 

(783

)

 

(605

)

Net debt

13,100

 

 

13,615

 

 

13,171

 

 

13,171

 

 

2,666

 

 

3,048

 

 

3,387

 

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:

 

 

Q2 '23

 

Q1 '23

 

2022

 

Q4 '22

 

Q3 '22

 

Q2 '22

 

Q1 '22

 

Income Statement Classification

 

(In $ millions)

 

 

Exit and shutdown costs

21

 

26

 

52

 

 

2

 

14

 

29

 

 

7

 

Cost of sales / SG&A / Other (charges) gains, net / Gain (loss) on disposition of businesses and assets, net / Non-operating pension and other postretirement employee benefit (expense) income

Asset impairments

 

 

 

 

13

 

 

2

 

 

12

 

 

(1

)

 

 

 

Cost of sales / Other (charges) gains, net

Impact from plant incidents and natural disasters(1)

 

 

6

 

 

17

 

 

17

 

 

 

 

 

 

 

 

Cost of sales

Mergers, acquisitions and dispositions

23

 

 

99

 

 

267

 

 

138

 

 

44

 

 

29

 

 

56

 

 

Cost of sales / SG&A

Actuarial (gain) loss on pension and postretirement plans

 

 

 

 

80

 

 

80

 

 

 

 

 

 

 

 

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

Legal settlements and commercial disputes

6

 

 

 

 

3

 

 

 

 

1

 

 

 

 

2

 

 

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

Other

4

 

 

 

 

(10

)

 

 

 

 

 

(10

)

 

 

 

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

Certain Items attributable to Celanese Corporation

54

 

 

131

 

 

422

 

 

239

 

 

71

 

 

47

 

 

65

 

 

 

___________________________

(1)

Primarily associated with Winter Storm Elliott.

Table 9

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

 

 

 

 

 

 

2022

 

 

 

 

 

(In $ millions, except percentages)

Net earnings (loss) attributable to Celanese Corporation

 

 

 

 

1,894

 

 

 

 

 

 

 

Adjusted EBIT (Table 1)

 

 

 

 

2,171

 

Adjusted effective tax rate (Table 3a)

 

 

 

 

13

%

Adjusted EBIT tax effected

 

 

 

 

1,889

 

 

 

 

 

 

 

 

2022

 

2021

 

Average

 

(In $ millions, except percentages)

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

1,306

 

791

 

1,049

 

Long-term debt, net of unamortized deferred financing costs

13,373

 

3,176

 

8,275

 

Celanese Corporation stockholders' equity

5,637

 

4,189

 

4,913

 

Invested capital

 

 

 

 

14,237

 

 

 

 

 

 

 

Return on invested capital (adjusted)

 

 

 

 

13.3

%

 

 

 

 

 

 

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

 

 

 

 

13.3

%

 

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