Celanese(CE) - 2025 Q2 - Quarterly Results

Introduction and Non-US GAAP Financial Measures 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 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] - The company's business is presented in two segments: Engineered Materials and the Acetyl Chain[4] - Management believes non-GAAP measures are important supplemental tools for assessing financial results, evaluating financial condition, and making period-to-period comparisons[6] Definitions of Non-US GAAP Measures 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] - Operating EBITDA is defined as Adjusted EBIT plus depreciation and amortization, used for evaluating operating performance relative to peers[13] - 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] - Free cash flow is defined as net cash from operations, less capital expenditures, and adjusted for NCI contributions/distributions to measure liquidity[18] - Net debt is defined as total debt less cash and cash equivalents, used to evaluate the company's capital structure[18] - Return on invested capital (adjusted) is defined as tax-effected Adjusted EBIT divided by average invested capital to assess income generation from capital[18] Financial Performance and Reconciliations 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) 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) 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) 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][24] Net Sales Analysis (Table 4, 4a, 4b, 4c) 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) 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) 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) 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) 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] Capital Structure and Debt (Table 7) 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) 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] Return on Invested Capital (Adjusted) (Table 9) 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]