Summary of Celanese Conference Call Company Overview - **Company**: Celanese - **CEO**: Scott Richardson, appointed on January 1st, with over 20 years of experience at Celanese in various roles in Asia and the U.S. [1][2] Key Focus Areas 1. **Earnings Per Share (EPS) Growth**: - Targeting EPS of $1.3 to $1.5 for Q2, an increase of approximately $1 or $0.08 from Q1 [3] - Focus on driving incremental EPS every quarter, independent of broader macroeconomic conditions [3][4] 2. **Free Cash Flow Generation**: - Projecting free cash flow of $700 to $800 million for the year [4] - Emphasis on working capital reduction and significant cuts in capital expenditures [4][5] 3. **Deleveraging the Balance Sheet**: - Targeting $3.5 billion in maturities to be paid off by the end of 2027 using free cash flow and divestiture proceeds [5][6] - Recent refinancing transaction pushed out maturities, with a focus on reducing leverage [6][7] Business Trends and Market Insights - **Regional Performance**: - Improvement noted in the automotive sector, particularly in Europe, with an end to destocking observed since February [12][13] - Stability in the Western Hemisphere automotive market, but softness in demand from China [13][14] - **Visibility and Order Trends**: - Limited visibility on orders due to macroeconomic uncertainty, leading to cautious customer commitments [17][18] - **Cost Savings Initiatives**: - Increased cost savings target from $80 million to $120 million, with a focus on Engineered Materials [22] - Operational changes and asset optimization are key drivers of these savings [22][23] Tariff and Trade Impacts - Anticipated tariff impacts of approximately $15 million per quarter in Q3, primarily affecting products shipped from the U.S. to China [24] - Expectation that tariff impacts will decrease in the second half of the year due to logistical adjustments [25] Future Guidance and Strategic Goals - **EPS Exit Rate**: - Aiming for a $2 per share exit run rate for the year, with a bridge from Q2 EPS of $1.4 [27][29] - Focus on self-help actions and cost reductions to achieve this target [28][29] - **Investment and Capital Expenditure**: - CapEx reduced to maintenance levels of $300 million to $350 million, expected to remain stable for several years [49][50] - Emphasis on harvesting returns and improving free cash flow before considering growth capital investments [50][51] Industry Dynamics - **Automotive Sector**: - Normalization of volumes in the automotive sector, with stable sales in the U.S. but some volume weakness in China [52][55] - Focus on specialty applications in China, where technical requirements are increasing [58][60] - **Nylon and Acetyls**: - Addressing profitability issues in the nylon portfolio through plant closures and price increases [70][71] - New supply in acetyls from China is being managed by pushing capacity downstream [75] Divestiture Strategy - Targeting $1 billion in divestiture proceeds by 2027, with strong interest in the MicroMax transaction [5][41] - Exploring additional asset sales to accelerate deleveraging and unlock value [39][45] Conclusion - Celanese is focused on executing its strategic initiatives to drive EPS growth, generate free cash flow, and deleverage its balance sheet while navigating a challenging macroeconomic environment. The company is also adapting to industry dynamics, particularly in the automotive and chemical sectors, to position itself for future growth.

Financial Data and Key Metrics Changes - The company anticipates a cash flow generation of $700 million to $800 million for the year, despite uncertainties in the second half [40][44][73] - The company expects a run rate of approximately $2 per share by year-end if demand remains stable [60][64] Business Line Data and Key Metrics Changes - Engineered Materials volumes were down 4% year-over-year, while acetyl chain volumes were down 6% [25][28] - The company noted a significant improvement in acetate tow volumes, with April volumes being about 25% higher than January [28] Market Data and Key Metrics Changes - The company is observing a stabilization in the Nylon business, which has been a significant driver of earnings decline [16][18] - The automotive sector is showing signs of recovery, with the company outperforming the global industry decline [45] Company Strategy and Development Direction - The company is focusing on cash generation and is exploring various divestiture options beyond Micromax [12][13] - The company is committed to reducing costs and improving operational efficiency, particularly in the Nylon segment [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding demand uncertainty, particularly in the second half of the year [11][60] - The company is optimistic about the potential for earnings recovery, driven by self-help actions and cost reductions [64][70] Other Important Information - The company has been actively managing its portfolio and is focused on high-impact programs to drive growth [56][114] - The company has not seen project cancellations in China, although there are signs of reduced orders in low-margin segments [74][100] Q&A Session Summary Question: What is the expected earnings cadence for the second half of the year? - Management indicated that there are tailwinds from cost reductions and volume increases, estimating a potential $100 million improvement in the second half [9][10] Question: How is the EBITDA margin for Micromax? - The revenue for Micromax is approximately $300 million, with EBITDA margins in the high teens [15] Question: What is the outlook for the Nylon 66 business? - Management acknowledged challenges due to reduced demand and increased capacity, but noted stabilization efforts are underway [16][32] Question: How do oil prices affect the company? - Management stated that the company is relatively agnostic to oil prices, focusing more on demand dynamics [22][23] Question: What is the company's strategy regarding pricing actions? - The company has successfully implemented price increases and is focused on reversing unsustainable pricing trends [55][108] Question: What is the expected cash flow generation for the year? - Management is confident in generating $700 million to $800 million in free cash flow, supported by various operational levers [40][44] Question: How is the company performing in the automotive sector? - The company reported a 5% decline in automotive volumes, outperforming the global industry decline of 10% [45] Question: What is the impact of tariffs on the acetyl chain? - Management indicated that tariffs have minimal impact on the acetyl chain, primarily affecting Engineered Materials [50] Question: What is the company's approach to managing leverage? - The company is focused on generating cash and reducing debt, with no liquidity challenges anticipated [80]

Financial Data and Key Metrics Changes - The company reported a significant focus on cash generation, targeting free cash flow of $700 million to $800 million for the year despite uncertainties in demand [38][42][44] - The management indicated that the second half of the year could see tailwinds amounting to approximately $100 million from cost reductions and volume increases [7][41] Business Line Data and Key Metrics Changes - Engineered Materials volumes were down 4% year-over-year, while acetyl chain volumes decreased by 6% [23][25] - The company noted a strong recovery in acetate tow volumes, with April volumes being approximately 25% higher than January [26] Market Data and Key Metrics Changes - The automotive sector showed a decline of 5% in volumes, compared to a 10% decline in the global industry, indicating some market share gains [44] - The company observed a lack of normal seasonal pickup in acetyls, particularly in paints and coatings, which typically see stronger demand in Q2 [25] Company Strategy and Development Direction - The company is actively pursuing divestitures beyond Micromax, focusing on cash generation and portfolio optimization [9][10] - Management emphasized the importance of stabilizing the nylon business, which has been a significant driver of earnings decline, and is taking actions to improve profitability [14][30] Management Comments on Operating Environment and Future Outlook - Management expressed caution regarding demand uncertainty, particularly in the second half of the year, while noting some positive trends in April and May [8][126] - The company is not assuming any significant improvements in demand but is focused on self-help actions to drive cash flow and earnings [61][62] Other Important Information - The company highlighted that it has a flexible operating model and is relatively agnostic to oil price fluctuations, focusing instead on demand dynamics [20][21] - Management indicated that the nylon business has faced significant challenges due to reduced demand and increased capacity, leading to overcapacity issues [30][31] Q&A Session Summary Question: What is the expected earnings cadence for the second half of the year? - Management indicated potential tailwinds of around $100 million from cost reductions and volume increases, but demand uncertainty remains a key concern [6][7] Question: Is Micromax the only divestiture planned for this year? - Management confirmed that they are exploring multiple divestiture options beyond Micromax, focusing on cash generation [9][10] Question: What are the EBITDA margins for the Micromax business? - The revenue for Micromax is approximately $300 million, with EBITDA margins in the high teens [12] Question: What is the outlook for the nylon business? - Management acknowledged that the nylon business has been a significant drag on operating profit and emphasized the need for focused actions to stabilize and improve profitability [14][30] Question: How is the company positioned regarding oil price changes? - Management stated that the company has a flexible operating model and is generally agnostic to oil price fluctuations, focusing more on demand [20][21] Question: What is the expected impact of tariffs on the acetyl chain? - Management indicated that tariffs have minimal impact on the acetyl chain, with more significant effects seen in Engineered Materials [50] Question: What is the company's strategy for pricing actions in the Engineered Materials portfolio? - Management confirmed that they are implementing pricing actions to reverse negative trends and improve margins [54][56] Question: What is the expected cash flow generation for the year? - Management reiterated confidence in generating $700 million to $800 million in free cash flow, despite uncertainties in demand [38][42] Question: How is the company addressing the challenges in the nylon business? - Management is taking decisive actions to address overcapacity and improve profitability in the nylon segment [30][31]