Group 1 - The core viewpoint is that Bank of America has lowered the target price for Celanese from $65 to $59 [1]

Financial Data and Key Metrics Changes - The company is targeting a quarterly EPS run rate of $2, which is considered achievable with concrete plans in place [11][15] - Free cash flow generation is prioritized, with a guide of $700 to $800 million for the year, indicating strong operational cash flow despite high interest expenses [21][71] Business Line Data and Key Metrics Changes - In the Engineered Materials segment, there has been a noted weakness in demand, particularly in China and Europe, while the Americas remain stable [8][9] - The Acetyl segment is experiencing a similar trend, with expectations of continued softness in demand for certain products [25][26] Market Data and Key Metrics Changes - The Western Hemisphere is reported to have the lowest acetyl demand in twenty years, impacting overall performance [76] - The company is seeing a shift in customer behavior, with many reducing inventory levels due to uncertainty in demand [85] Company Strategy and Development Direction - The company is focusing on cost structure improvements and executing differentiated business models to enhance profitability [11][15] - There is an emphasis on diversifying the Engineered Materials business beyond automotive applications, targeting sectors like drug delivery and clean energy [96] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current demand environment is weak but expresses confidence in the company's ability to adapt and capture future opportunities [40][41] - The visibility of order books is currently low, complicating predictions for the fourth quarter [62] Other Important Information - The company is actively pursuing divestitures, with a focus on maximizing profitability and reducing complexity in transactions [105][112] - The MicroMax divestiture process is progressing well, with management expressing confidence in achieving their targets [105] Q&A Session Summary Question: What end markets are seeing weakening demand? - Management noted a pullback in China automotive orders and some weakness in European demand, while the Americas remain stable [8] Question: How does the company plan to achieve the $2 EPS target? - The company has identified controllable actions in cost structure and pricing strategies to reach the target, although it may take longer than initially expected [11][15] Question: Are tariffs affecting the tow business in China? - Management confirmed that the tow business in China is not impacted by tariffs as it operates through joint ventures [30] Question: What is the outlook for the acetic acid business in China? - Management indicated that while the market is challenging, they are not speculating on future capacity rationalization due to anti-involution policies [45] Question: How is the company managing its debt maturities? - The company plans to address debt maturities through free cash flow generation and divestiture proceeds, rather than relying on its revolver [64] Question: What is the impact of inventory reduction initiatives on earnings? - Management explained that inventory reduction efforts are expected to have a sequential negative impact on earnings in the short term but are part of a long-term strategy [19][24] Question: How does the company view the current demand environment? - Management expressed that while the demand environment is weak, they are focused on operational efficiency and preparing for future demand changes [40][41]

Financial Data and Key Metrics Changes - The company is targeting a quarterly EPS run rate of $2, which is considered achievable with concrete plans in place [9][13] - Free cash flow generation is prioritized, with a guide of $700 to $800 million for the year, translating to approximately $7 per share [18][68] - The company reported a sequential negative impact of $25 million in Q3 due to inventory reduction efforts [17][22] Business Line Data and Key Metrics Changes - In the Engineered Materials segment, there has been a noted weakness in demand from China and Europe, while the Americas remained stable [6][7] - The Acetyl segment is expected to see flat performance compared to Q2, with no significant changes anticipated in the near term [98] Market Data and Key Metrics Changes - The company is experiencing the lowest demand levels in the Western Hemisphere for acetyl products in 20 years, with a 5% to 6% decline in volumes compared to the first half of the previous year [72][73] - The visibility of the order book has decreased significantly, with only two weeks of reliable orders in Engineered Materials [58] Company Strategy and Development Direction - The company is focusing on cost structure improvements and executing differentiated business models to achieve its EPS target [9][13] - There is an emphasis on diversifying the Engineered Materials business beyond automotive applications, exploring opportunities in drug delivery, performance footwear, and clean energy [94] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing demand and emphasized the importance of cash generation [18][37] - The company is prepared to pivot with demand changes and is actively working on controllable actions to improve profitability [13][39] Other Important Information - The company is undergoing a divestiture process, with the MicroMax project progressing well and expected to yield positive results in the second half of the year [102] - The company has extended its revolver to 2030, ensuring sufficient liquidity to address upcoming maturities [60][62] Q&A Session Summary Question: What end markets are seeing weakening demand? - Management noted a pullback in China automotive orders and some weakness in European demand, while the Americas remained stable [6][7] Question: How does the company plan to achieve the $2 EPS target? - The company has identified four controllable areas to improve cost structure and pricing, which will help reach the target, albeit potentially delayed [9][13] Question: Are tariffs affecting the tow business in China? - Management confirmed that the tow business in China is not impacted by tariffs as it operates through a joint venture [27] Question: What is the outlook for the acetic acid business in China? - Management indicated that the acetic acid business is currently breakeven and is pivoting towards downstream products for better margins [28] Question: How does the company view the current demand environment? - Management described the demand environment as uncertain, with customers reducing inventories, impacting sales [82][84] Question: What is the status of the MicroMax divestiture process? - The MicroMax process is progressing well, with management confident in achieving positive outcomes in the near future [102]

Core Insights - Celanese Corporation reported second-quarter 2025 earnings from continuing operations of $1.90 per share, an increase from $1.42 in the prior-year quarter, while adjusted earnings were $1.44 per share, down 39.5% from $2.38 a year ago, beating the Zacks Consensus Estimate of $1.38 [1][8] - Revenues for the quarter were $2,532 million, a decrease of approximately 4.5% year over year, but exceeded the Zacks Consensus Estimate of $2,496.5 million, attributed to lower pricing and volumes, with prices falling 4% year over year [2][8] Segment Highlights - The Engineered Materials unit reported net sales of $1,442 million, down around 1.7% year over year, surpassing the estimate of $1,368.7 million, with an operating profit of $165 million and adjusted EBIT of $214 million [3] - The Acetyl Chain segment posted net sales of $1,115 million, down roughly 7.2% year over year, beating the estimate of $1,102.2 million, generating an operating profit of $154 million and adjusted EBIT of $196 million [4] Financials - Celanese ended the quarter with cash and cash equivalents of $1,173 million, up approximately 23.3% sequentially, while long-term debt increased by 2.5% sequentially to $12,689 million [5] - Cash provided by operating activities was $410 million, and free cash flow was $311 million in the reported quarter [5] Outlook - The company anticipates a softer demand environment across most key end-markets for the second half of the year, expecting that slowing demand will partly offset the benefits of cost reduction initiatives, with adjusted earnings per share forecasted in the range of $1.10 to $1.40 for the third quarter [6] - Celanese reaffirms its expectation to generate $700 million to $800 million in free cash flow for 2025 [6] Price Performance - Celanese's shares have declined by 27.4% over the past six months, compared to a 2.3% decline in the industry [7]

Q2 2025 Performance - Celanese's Q2 2025 adjusted EPS was $1.44[10] - Acetyl Chain (AC) adjusted EBIT was $196 million[10] - Engineered Materials (EM) adjusted EBIT was $214 million[10] - The company generated $311 million in free cash flow in Q2 2025[10] Q3 2025 Outlook - Celanese anticipates an adjusted EPS guidance of $1.10 to $1.40 for Q3 2025[13] - The company projects an adjusted EBIT for Acetyl Chain between $195 million and $215 million, and for Engineered Materials between $170 million and $190 million[13] Cost Reduction Initiatives - Celanese expects cost reduction initiatives to deliver $120 million in cost savings in 2025[16] - The company identifies future incremental cost reduction opportunities of $50 million - $100 million[16] Free Cash Flow - Celanese is on track to achieve a target of $700 million to $800 million FY2025 free cash flow generation[18] - The company's 1H 2025 free cash flow is higher year-over-year by approximately 80%[18] Acetyl Chain (AC) Business - Approximately 70% of AC revenue in the Western Hemisphere is derived from contracted business in 2024[38] - AC Operating EBITDA margin has consistently been greater than 20% for the past five years[26]

Group 1 - U.S. stock futures are slightly lower, with Dow futures down approximately 0.1% [1] - Celanese Corporation reported second-quarter financial results and provided third-quarter adjusted EPS guidance below market estimates, expecting earnings of $1.10 to $1.40 per share compared to estimates of $1.73 per share [1] - Celanese shares fell 15.5% to $40.00 in pre-market trading following the announcement [1] Group 2 - BigBear.ai Holdings, Inc. experienced a decline of 30.8% to $4.91 in pre-market trading after reporting worse-than-expected second-quarter results and cutting FY25 sales guidance [4] - PubMatic, Inc. shares dropped 28.7% to $7.55 in pre-market trading after issuing Q2 results and Q3 sales guidance below estimates [4] - Fluence Energy, Inc. shares dipped 14.3% to $7.83 in pre-market trading after mixed third-quarter financial results [4] - Archer Aviation Inc. fell 9.9% to $8.60 in pre-market trading due to a wider-than-expected quarterly loss [4] - Microvast Holdings, Inc. shares decreased by 10.2% to $2.72 after reporting disappointing quarterly sales [4] - TAT Technologies Ltd. saw a decline of 7.6% to $34.25 following weak quarterly sales [4]

Core Insights - Celanese reported revenue of $2.53 billion for the quarter ended June 2025, a decrease of 4.5% year-over-year, but exceeded the Zacks Consensus Estimate by 1.42% [1] - Earnings per share (EPS) was $1.44, down from $2.38 in the same quarter last year, and surpassed the consensus estimate of $1.38 by 4.35% [1] Financial Performance - Net Sales from the Acetyl Chain were $1.12 billion, exceeding the average estimate of $1.1 billion, but reflecting a year-over-year decline of 7.2% [4] - Net Sales from Inter segment eliminations were reported at -$25 million, worse than the estimated -$20.32 million, but showed a significant year-over-year increase of 38.9% [4] - Net Sales from Engineered Materials reached $1.44 billion, above the average estimate of $1.35 billion, with a slight year-over-year decline of 1.7% [4] - Operating EBITDA for the Acetyl Chain was $260 million, below the average estimate of $287.13 million [4] - Operating EBITDA for Other Activities was -$54 million, slightly better than the average estimate of -$56.51 million [4] - Operating EBITDA for Engineered Materials was $326 million, exceeding the average estimate of $278.5 million [4] Stock Performance - Celanese shares have declined by 21.3% over the past month, contrasting with a 2.7% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Celanese reported quarterly earnings of $1.44 per share, exceeding the Zacks Consensus Estimate of $1.38 per share, but down from $2.38 per share a year ago, indicating an earnings surprise of +4.35% [1] - The company posted revenues of $2.53 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.42%, although this is a decrease from year-ago revenues of $2.65 billion [2] - Over the last four quarters, Celanese has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance - Celanese shares have declined approximately 30.6% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current Zacks Rank for Celanese is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The consensus EPS estimate for the upcoming quarter is $1.77 on revenues of $2.54 billion, and for the current fiscal year, it is $5.13 on revenues of $9.85 billion [7] - The outlook for the Chemical - Specialty industry, where Celanese operates, is currently in the bottom 35% of over 250 Zacks industries, which may impact the stock's performance [8]

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's interim financials reflect decreased sales and operating profit, offset by a significant tax benefit that boosted net earnings, amid increased assets and debt Consolidated Statements of Operations Highlights (Q2 & H1 2025 vs 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $2,532M | $2,651M | $4,921M | $5,262M | | **Gross profit** | $535M | $641M | $1,011M | $1,195M | | **Operating profit** | $233M | $250M | $401M | $460M | | **Net earnings attributable to Celanese** | $199M | $155M | $178M | $276M | | **Diluted EPS** | $1.81 | $1.41 | $1.62 | $2.52 | Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,173M | $962M | | **Total current assets** | $5,675M | $5,145M | | **Total assets** | $23,713M | $22,857M | | **Long-term debt, net** | $12,689M | $11,078M | | **Total equity** | $5,704M | $5,580M | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $447M | $393M | | **Net cash used in investing activities** | ($186M) | ($242M) | | **Net cash used in financing activities** | ($71M) | ($748M) | | **Net increase (decrease) in cash** | $211M | ($620M) | [Notes to the Unaudited Interim Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) The notes detail significant events including a planned divestiture, major debt refinancing, a dividend reduction, and a favorable tax settlement - On May 5, 2025, the Company announced its intent to **divest its Micromax® portfolio** of products as part of its strategy for cash generation and deleveraging[33](index=33&type=chunk) - In March 2025, the company completed a public offering of senior unsecured notes totaling approximately **$2.55 billion equivalent** to fund tender offers for existing notes and repay other debt[56](index=56&type=chunk)[57](index=57&type=chunk) - The company **reduced its quarterly dividend by approximately 95%** starting in Q1 2025, with a dividend of $0.03 per share declared on July 16, 2025[81](index=81&type=chunk) - The effective income tax rate was a **57% benefit for Q2 2025**, compared to a 16% expense in Q2 2024, due to deferred tax benefits and a German tax settlement[87](index=87&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased sales and profits due to weak demand, with a strategic focus on deleveraging through cost controls and capital management Consolidated Financial Highlights (Q2 & H1 2025 vs 2024) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $2,532M | $2,651M | $4,921M | $5,262M | | **Operating profit** | $233M | $250M | $401M | $460M | | **Net earnings attributable to Celanese** | $199M | $155M | $178M | $276M | - The company is experiencing **demand challenges** in key end-markets like automotive, paints, coatings, and construction due to tepid global macroeconomic conditions[216](index=216&type=chunk) - **Deleveraging is a key priority**, leading the company to pause its share repurchase program and reduce its quarterly dividend by approximately 95%[173](index=173&type=chunk) [Business Segments Analysis](index=44&type=section&id=MD&A%20-%20Business%20Segments) Engineered Materials' profit rose on cost savings despite lower sales, while Acetyl Chain's profit fell sharply due to pricing and volume declines Engineered Materials Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,442M | $1,467M | (1.7)% | | **Operating Profit** | $165M | $138M | 19.6% | - Engineered Materials' operating profit increased due to a **favorable $27 million impact** from non-recurring prior-year restructuring costs and reduced spending[161](index=161&type=chunk) Acetyl Chain Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $1,115M | $1,202M | (7.2)% | | **Operating Profit** | $154M | $242M | (36.4)% | - Acetyl Chain's operating profit decreased due to lower net sales, driven by a **7% price decline and 2% volume decline**, and $16 million in higher plant turnaround costs[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=MD&A%20-%20Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash and credit facilities, prioritizing deleveraging with reduced dividends and managed capital expenditures - Primary liquidity sources are cash from operations, **$1.2 billion in cash** and cash equivalents, and **$1.82 billion available** under revolving credit facilities as of June 30, 2025[172](index=172&type=chunk) - Capital expenditures for 2025 are expected to be approximately **$300 million to $350 million**, reflecting a focus on required maintenance and productivity improvements[175](index=175&type=chunk) Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | $447M | $393M | | **Net cash used in investing activities** | ($186M) | ($242M) | | **Net cash used in financing activities** | ($71M) | ($748M) | [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) There have been no material changes to the company's market risks since its 2024 Annual Report - Market risk for the Company has **not changed materially** from the foreign exchange, interest rate and commodity risks disclosed in the 2024 Form 10-K[220](index=220&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are **effective as of June 30, 2025**[221](index=221&type=chunk) - **No changes in internal control** over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[222](index=222&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) There have been no significant developments in legal proceedings since the 2024 Form 10-K filing - The Company is involved in various legal proceedings incidental to its business, and there have been **no significant developments** beyond what was reported in the 2024 Form 10-K[225](index=225&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) The company refers to its 2024 Annual Report for a discussion of risk factors, noting no material changes - Readers are referred to the **Risk Factors section in the company's 2024 Form 10-K** for a detailed description of potential risks[226](index=226&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any common stock during the quarter, with $1.1 billion remaining under its repurchase authorization - The company **did not repurchase any Common Stock** during the three months ended June 30, 2025[227](index=227&type=chunk) - As of June 30, 2025, approximately **$1.1 billion remained available** for share repurchases under the board-authorized program[227](index=227&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The company filed to eliminate a class of preferred stock and reported no new officer trading plans - On May 15, 2025, the Company filed a **Certificate of Elimination** to remove provisions for a previously redeemed class of Preferred Stock[230](index=230&type=chunk) - **No director or Section 16 officer** adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[231](index=231&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required certifications and corporate documents

[Introduction and Non-US GAAP Financial Measures](index=1&type=section&id=Introduction%20and%20Non-US%20GAAP%20Financial%20Measures) This section introduces the company's non-US GAAP financial measures, explaining their purpose for performance assessment and providing detailed definitions of key metrics [Purpose and Use of Non-US GAAP Measures](index=1&type=section&id=Purpose%20and%20Use%20of%20Non-US%20GAAP%20Measures) The company provides this supplemental document to help investors and analysts assess its financial performance using non-US GAAP measures, which management believes are important for period-to-period comparisons. These measures, which cover two business segments (Engineered Materials and the Acetyl Chain), should be considered supplemental to, and not a replacement for, US GAAP results - The purpose of this document is to provide supplemental financial information and reconciliations for non-US GAAP financial measures to investors and analysts[3](index=3&type=chunk) - The company's business is presented in two segments: Engineered Materials and the Acetyl Chain[4](index=4&type=chunk) - Management believes non-GAAP measures are important supplemental tools for assessing financial results, evaluating financial condition, and making period-to-period comparisons[6](index=6&type=chunk) [Definitions of Non-US GAAP Measures](index=2&type=section&id=Definitions%20of%20Non-US%20GAAP%20Measures) This section defines key non-GAAP metrics used by the company. Adjusted EBIT and Operating EBITDA are performance measures excluding certain non-operational items to assess core operating results. Adjusted EPS removes these items and tax effects to show underlying earnings power. Free Cash Flow measures liquidity and long-term cash generation, while Net Debt assesses capital structure. Return on Invested Capital (adjusted) evaluates the efficiency of capital deployment - Adjusted EBIT is defined as net earnings adjusted for discontinued operations, interest, taxes, and "Certain Items" to show primary operating results[13](index=13&type=chunk) - Operating EBITDA is defined as Adjusted EBIT plus depreciation and amortization, used for evaluating operating performance relative to peers[13](index=13&type=chunk) - Adjusted earnings per share is defined as earnings from continuing operations adjusted for "Certain Items" and related tax effects, using a normalized tax rate[13](index=13&type=chunk) - Free cash flow is defined as net cash from operations, less capital expenditures, and adjusted for NCI contributions/distributions to measure liquidity[18](index=18&type=chunk) - Net debt is defined as total debt less cash and cash equivalents, used to evaluate the company's capital structure[18](index=18&type=chunk) - Return on invested capital (adjusted) is defined as tax-effected Adjusted EBIT divided by average invested capital to assess income generation from capital[18](index=18&type=chunk) [Financial Performance and Reconciliations](index=5&type=section&id=Financial%20Performance%20and%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures, including Adjusted EBIT, Operating EBITDA, and Adjusted EPS, alongside analyses of segment performance, net sales, cash flow, capital structure, and return on invested capital [Reconciliation of Adjusted EBIT and Operating EBITDA (Table 1)](index=5&type=section&id=Table%201%20Reconciliation%20of%20Adjusted%20EBIT%20and%20Operating%20EBITDA) This table reconciles the company's GAAP Net Earnings to the non-GAAP measures of Adjusted EBIT and Operating EBITDA. For Q2 2025, Net Earnings of $199 million were adjusted to an Adjusted EBIT of $344 million and an Operating EBITDA of $532 million. The adjustments primarily include adding back interest, taxes, depreciation, and $42 million in "Certain Items" Reconciliation of Net Earnings to Adjusted EBIT & Operating EBITDA (In $ millions) | Metric | Q2 '25 | 2024 | | :--- | :--- | :--- | | Net earnings (loss) attributable to Celanese Corporation | 199 | (1,531) | | Adjustments (Interest, Tax, Certain Items, etc.) | 145 | 3,167 | | **Adjusted EBIT** | **344** | **1,636** | | Depreciation and amortization expense | 188 | 728 | | **Operating EBITDA** | **532** | **2,364** | [Segment Performance Analysis (Table 2)](index=6&type=section&id=Table%202%20Segment%20Performance%20Analysis) This section provides a detailed breakdown of financial performance for the Engineered Materials and Acetyl Chain segments. In Q2 2025, Engineered Materials generated an Adjusted EBIT of $214 million (14.8% margin), while the Acetyl Chain produced $196 million (17.6% margin), contributing to a total company Adjusted EBIT of $344 million Adjusted EBIT by Segment (In $ millions) | Segment | Q2 '25 | Q2 '25 Margin | 2024 | 2024 Margin | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | 214 | 14.8% | 847 | 15.1% | | Acetyl Chain | 196 | 17.6% | 1,102 | 23.1% | | Other Activities | (66) | N/A | (313) | N/A | | **Total** | **344** | **13.6%** | **1,636** | **15.9%** | Operating EBITDA by Segment (In $ millions) | Segment | Q2 '25 | Q2 '25 Margin | 2024 | 2024 Margin | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | 326 | 22.6% | 1,284 | 22.9% | | Acetyl Chain | 260 | 23.3% | 1,346 | 28.3% | | Other Activities | (54) | N/A | (266) | N/A | | **Total** | **532** | **21.0%** | **2,364** | **23.0%** | [Reconciliation of Adjusted Earnings Per Share (Table 3 & 3a)](index=8&type=section&id=Table%203%20%26%203a%20Reconciliation%20of%20Adjusted%20Earnings%20Per%20Share) This section reconciles GAAP earnings per share to the non-GAAP Adjusted EPS. For Q2 2025, GAAP EPS of $1.90 was adjusted to $1.44, primarily by removing the impact of "Certain Items" and applying a normalized adjusted tax rate of 9%. The adjusted tax rate itself is reconciled from the estimated US GAAP rate, accounting for various discrete and operational tax items Adjusted Earnings Per Share Reconciliation | Metric | Q2 '25 | 2024 | | :--- | :--- | :--- | | GAAP EPS from continuing operations | $1.90 | $(13.94) | | Adjustments (Certain Items, etc.) | $(0.46) | $22.21 | | **Adjusted EPS** | **$1.44** | **$8.27** | - The company uses a consistent adjusted effective tax rate of **9%** for both its 2025 quarterly and full-year 2024 adjusted earnings calculations[23](index=23&type=chunk)[24](index=24&type=chunk) [Net Sales Analysis (Table 4, 4a, 4b, 4c)](index=10&type=section&id=Table%204%2C%204a%2C%204b%2C%204c%20Net%20Sales%20Analysis) This section provides a comprehensive analysis of net sales, detailing segment contributions and examining sequential and year-over-year changes driven by volume, price, and currency impacts [Net Sales by Segment (Table 4)](index=10&type=section&id=Table%204%20Net%20Sales%20by%20Segment) In Q2 2025, the company reported total net sales of $2,532 million. The Engineered Materials segment contributed $1,442 million, and the Acetyl Chain segment contributed $1,115 million. For the full year 2024, total net sales were $10,268 million Net Sales by Segment (In $ millions) | Segment | Q2 '25 | 2024 | | :--- | :--- | :--- | | Engineered Materials | 1,442 | 5,595 | | Acetyl Chain | 1,115 | 4,763 | | **Total Net Sales** | **2,532** | **10,268** | [Sequential (QoQ) Net Sales Analysis (Table 4a)](index=11&type=section&id=Table%204a%20Sequential%20%28QoQ%29%20Net%20Sales%20Analysis) In Q2 2025 compared to Q1 2025, total company net sales increased by 6%. This was driven by a 12% increase in Engineered Materials sales (9% volume, 3% currency) and flat sales in the Acetyl Chain, where a volume and price decline was offset by a currency benefit Q2'25 vs Q1'25 Net Sales Change (%) | Segment | Volume | Price | Currency | Total | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | 9% | 0% | 3% | 12% | | Acetyl Chain | -1% | -2% | 3% | 0% | | **Total Company** | **4%** | **-1%** | **3%** | **6%** | [Year-over-Year (YoY) Net Sales Analysis (Table 4b & 4c)](index=12&type=section&id=Table%204b%20%26%204c%20Year-over-Year%20%28YoY%29%20Net%20Sales%20Analysis) Compared to Q2 2024, total company net sales in Q2 2025 decreased by 4%, driven by declines in both volume (-2%) and price (-4%). For the full year 2024 versus 2023, net sales decreased by 6%, primarily due to a 4% price decline and a 1% volume decline Q2'25 vs Q2'24 Net Sales Change (%) | Segment | Volume | Price | Currency | Total | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | -3% | -1% | 2% | -2% | | Acetyl Chain | -2% | -7% | 2% | -7% | | **Total Company** | **-2%** | **-4%** | **2%** | **-4%** | FY 2024 vs FY 2023 Net Sales Change (%) | Segment | Volume | Price | Currency | Total | | :--- | :--- | :--- | :--- | :--- | | Engineered Materials | -5% | -3% | -1% | -9% | | Acetyl Chain | 4% | -6% | 0% | -2% | | **Total Company** | **-1%** | **-4%** | **-1%** | **-6%** | [Cash Flow and Liquidity Analysis (Table 5 & 6)](index=14&type=section&id=Table%205%20%26%206%20Cash%20Flow%20and%20Liquidity%20Analysis) The company generated $311 million in free cash flow in Q2 2025, a significant improvement from negative $73 million in Q1 2025 and $173 million in Q2 2024. This was derived from $410 million in cash from operations less $93 million in capital expenditures. The company also received $62 million in cash dividends from its equity investments during the quarter Free Cash Flow (In $ millions) | Metric | Q2 '25 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | 410 | 966 | | Capital expenditures | (93) | (435) | | Contributions from/(Distributions) to NCI | (6) | (33) | | **Free cash flow** | **311** | **498** | - The company received **$62 million** in cash dividends from its equity investments in Q2 2025, contributing to a total of **$288 million** for the full year 2024[44](index=44&type=chunk) [Capital Structure and Debt (Table 7)](index=15&type=section&id=Table%207%20Capital%20Structure%20and%20Debt) As of the end of Q2 2025, the company's net debt stood at $11,768 million. This represents a slight decrease from $11,833 million at the end of Q1 2025. The total debt of $12,941 million was offset by $1,173 million in cash and cash equivalents Net Debt Calculation (In $ millions) | Metric | Q2 '25 | 2024 | | :--- | :--- | :--- | | Total debt | 12,941 | 12,579 | | Cash and cash equivalents | (1,173) | (962) | | **Net debt** | **11,768** | **11,617** | [Analysis of "Certain Items" (Table 8)](index=16&type=section&id=Table%208%20Analysis%20of%20%22Certain%20Items%22) This table details the specific charges excluded from non-GAAP measures. In Q2 2025, "Certain Items" totaled $42 million, primarily consisting of $27 million in exit and shutdown costs. For the full year 2024, these items amounted to $2,009 million, dominated by a $1,638 million asset impairment charge related to goodwill and trade names Certain Items Breakdown (In $ millions) | Item | Q2 '25 | 2024 | | :--- | :--- | :--- | | Exit and shutdown costs | 27 | 236 | | Asset impairments | — | 1,638 | | Mergers, acquisitions and dispositions | 12 | 80 | | Other | 3 | 55 | | **Total Certain Items** | **42** | **2,009** | - The significant **$1.6 billion** asset impairment in 2024 was primarily related to goodwill and the Zytel® trade name[47](index=47&type=chunk) [Return on Invested Capital (Adjusted) (Table 9)](index=17&type=section&id=Table%209%20Return%20on%20Invested%20Capital%20%28Adjusted%29) For the full year 2024, the company's Return on Invested Capital (Adjusted) was 7.7%. This non-GAAP measure is calculated using tax-effected Adjusted EBIT of $1,489 million and an average invested capital base of $19,241 million. This contrasts sharply with the GAAP-based return of -8.0%, which was impacted by significant impairment charges Return on Invested Capital (Adjusted) - 2024 | Metric | Amount (In $ millions) | | :--- | :--- | | Adjusted EBIT | 1,636 | | Adjusted EBIT tax effected | 1,489 | | Average Invested capital | 19,241 | | **Return on invested capital (adjusted)** | **7.7%** | - The GAAP-based return on invested capital for 2024 was **-8.0%**, highlighting the significant difference between GAAP and non-GAAP performance metrics for the year[49](index=49&type=chunk)