Company Announcements

Celanese Corporation Reports Third Quarter 2019 Earnings

DALLAS--(BUSINESS WIRE)--Oct. 21, 2019-- Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, reported third quarter GAAP diluted earnings per share of $2.17 and adjusted earnings per share of $2.53, both sequential improvements over the prior quarter. The Company delivered net sales of $1.6 billion as 2 percent sequential volume growth offset the impact of a 1 percent decline in both pricing and foreign exchange. Despite no meaningful improvement in market demand over the second quarter, the Company recorded sequential growth in both Engineered Materials and the Acetyl Chain via their differentiated business models while again displaying a stable earnings profile in Acetate Tow. The Company generated operating cash flow of $397 million and free cash flow of $315 million. Celanese returned $352 million of cash to shareholders in the quarter via $275 million in share repurchases and $77 million in dividends, bringing the total year-to-date cash returned to $1.0 billion. Based on an expectation that market conditions are unlikely to improve in 2019, and including the impacts of the previously announced unplanned Clear Lake outage, the Company expects to deliver 2019 adjusted earnings between $9.60 and $9.80 per share.

Third Quarter 2019 Financial Highlights:

 

 

Three Months Ended

 

September 30,
2019

 

June 30,
2019

 

September 30,
2018

 

(unaudited)

 

(In $ millions)

Operating Profit (Loss)

 

 

 

 

 

Engineered Materials

111

 

 

103

 

 

124

 

Acetate Tow

34

 

 

(44

)

 

26

 

Acetyl Chain

180

 

 

188

 

 

287

 

Other Activities

(65

)

 

(61

)

 

(63

)

Total

260

 

 

186

 

 

374

 

 

Three Months Ended

 

September 30,
2019

 

June 30,
2019

 

September 30,
2018

 

(unaudited)

 

(In $ millions, except per share data)

Net Earnings (Loss)

265

 

 

210

 

 

402

 

 

 

 

 

 

 

Adjusted EBIT(1)

 

 

 

 

 

Engineered Materials

154

 

 

148

 

 

187

 

Acetate Tow

71

 

 

71

 

 

65

 

Acetyl Chain

191

 

 

189

 

 

277

 

Other Activities

(40

)

 

(32

)

 

(35

)

Total

376

 

 

376

 

 

494

 

 

 

 

 

 

 

Equity Earnings and Dividend Income, Other Income (Expense)

 

 

 

 

 

Engineered Materials

41

 

 

36

 

 

62

 

Acetate Tow

27

 

 

29

 

 

26

 

 

 

 

 

 

 

Operating EBITDA(1)

458

 

 

458

 

 

571

 

Diluted EPS - continuing operations

$

2.17

 

 

$

1.67

 

 

$

3.00

 

Diluted EPS - total

$

2.13

 

 

$

1.66

 

 

$

2.96

 

Adjusted EPS(1)

$

2.53

 

 

$

2.38

 

 

$

2.96

 

 

 

 

 

 

 

Net cash provided by (used in) investing activities

(82

)

 

(66

)

 

(78

)

Net cash provided by (used in) financing activities

(299

)

 

(307

)

 

(383

)

Net cash provided by (used in) operating activities

397

 

 

424

 

 

467

 

Free cash flow(1)

315

 

 

356

 

 

382

 

______________________________

(1)

See "Non-US GAAP Financial Measures" below.

Third Quarter 2019 Highlights:

  • Finalized permitting for the expansion of Clear Lake acetic acid to 2.0 million tons per year and Fairway methanol to 1.7 million tons per year, as part of the global acid reconfiguration. Engineering work progresses on both projects.
  • Completed the addition of new compounding lines in both Nanjing and Suzhou, China to meet growing demand from Engineered Materials' customers in Asia.
  • Named ICIS Company of the Year for 2018 based on analysis of 2018 financial metrics, robust profitability in the Acetyl Chain, and accelerated project commercialization in Engineered Materials.
  • Commercialized 1,315 Engineered Materials project wins in the third quarter of 2019 and on track to deliver more than 4,000 projects for the year.
  • Repurchased 2 percent of outstanding shares in the third quarter and 10 percent of outstanding shares over the last twelve months.

Third Quarter 2019 Business Segment Overview

Engineered Materials (EM)

Engineered Materials reported net sales of $591 million in the third quarter. Volume expanded 2 percent over the prior quarter as the business delivered 1,315 project wins in the third quarter, offsetting the continuation of depressed demand globally and some residual destocking, particularly in Europe. GAAP operating profit of $111 million and adjusted EBIT of $154 million both expanded sequentially as the business offset continued demand softness, a $6 million impact from turnarounds, and lower than expected affiliate contributions. Despite competitive dynamics similar to the previous quarter, Engineered Materials was able to sequentially expand GAAP operating profit and adjusted EBIT margins by 140 and 110 basis points, respectively, by preserving the pricing spreads over raw materials. Engineered Materials has increasingly collaborated with customers via its project model to sustain the earnings power of the base business under current market conditions. Year-to-date 2019 operating profit, which excludes affiliates, is within 2 percent of the same period in 2018, when market economics and demand levels were far more favorable.

Acetyl Chain

The Acetyl Chain recorded third quarter net sales of $867 million, as sequential volume growth of 1 percent offset the impact of foreign currency headwinds. GAAP operating profit was $180 million and adjusted EBIT was $191 million, as the business continued to focus downstream on VAM and emulsions, placing sequentially higher volume where incremental value could be captured. Additionally, the business strategically redirected higher volumes of acetic acid to China where industry pricing moderately expanded over the prior quarter, offsetting sequentially lower pricing of acetic acid in the Western Hemisphere. The Acetyl Chain effectively offset China acid pricing that remains low by historical standards, major turnarounds at Frankfurt VAM and Singapore acetic acid, and production limitations related to the incident at Clear Lake to deliver quarterly GAAP operating and adjusted EBIT margins over 20 percent, sustaining the enhanced profitability levels of the last two years. Since the Clear Lake incident, the business has executed a myriad of activations, including industry sourcing and shipping significant volumes across its global network, to expand third quarter volume sequentially and year over year and to continue meeting customer needs into the fourth quarter. Productivity-based investments are progressing at Clear Lake, which will enhance the operating flexibility of the global network and further lift foundational earnings levels.

Acetate Tow

Acetate Tow reported GAAP operating profit of $34 million and adjusted EBIT of $71 million in the third quarter, further demonstrating the continued stability of its earnings profile. Volume and price declined minimally on a sequential basis and were stable year over year, as secular demand and industry dynamics continue to stabilize. Dividends from affiliates were $27 million in the third quarter, down slightly from the prior quarter due to the impact of timing and currency. In the fourth quarter, Acetate Tow is expected to experience typical seasonality in its earnings, consistent with past years.

Cash Flow and Tax

The Company delivered operating cash flow of $397 million and free cash flow of $315 million in the quarter, driven by continued strength of earnings to cash conversion. In the third quarter, capital expenditures were $82 million, and the Company expects capital expenditures for 2019 to total nearly $400 million, inclusive of costs to repair the Clear Lake CO unit. During the third quarter, a total of $352 million in cash was returned to shareholders via $77 million in dividends and $275 million in share repurchases. The U.S. GAAP effective tax rate was 16 percent in the third quarter compared to 12 percent in the same quarter of last year, primarily due to the impact of functional currency differences in certain jurisdictions partially offset by the release of valuation allowance on tax credit carryforwards. During the third quarter, the 2019 tax rate for adjusted earnings per share was revised down to 13 percent, based on a change in sourcing of U.S. earnings between domestic and foreign sources and the associated impact to foreign tax credit utilization for the year.

Outlook

"Our businesses and teams have displayed remarkable resilience in the third quarter to deliver sequential growth despite tremendous challenges including a weak market demand backdrop as well as the incident at Clear Lake in the final weeks of the quarter," said Lori Ryerkerk, chief executive officer. "With few indications of sustained improvement up to this point, we now expect that low demand levels are likely to persist through the remainder of the year. Incorporating the financial impact of the Clear Lake incident to the fourth quarter, we expect 2019 adjusted earnings of $9.60 to $9.80 per share. Our final performance within the range will depend on the evolution of demand conditions and timing of the restart of the Clear Lake CO unit. Looking forward to 2020, we remain focused on controllable factors including productivity initiatives, business model enhancements, and high-return capital deployment that will deliver double-digit adjusted earnings per share growth next year, whether or not current demand conditions improve. At this stage, given an uncertain demand outlook, we expect 2020 adjusted earnings of $11 to $12 per share, with the higher end of the range achievable if we see improvement in demand conditions next year. We are still working a number of controllable actions and will have more visibility to further clarify the outlook as we get into next year and can assess early business conditions across the globe."

The Company is unable to reconcile forecasted adjusted earnings per share growth to US GAAP diluted earnings per share without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, is not practical.

The Company's prepared remarks related to the third quarter results will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library after market close on October 21, 2019. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our website. See "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 7,700 employees worldwide and had 2018 net sales of $7.2 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com or our blog at www.celaneseblog.com.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. All forward-looking statements are based upon current expectations and beliefs and various assumptions. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements contained in this release. These risks and uncertainties include, among other things: changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; the length and depth of product and industry business cycles, particularly in the automotive, electrical, textiles, electronics and construction industries; changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources; the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases; the ability to maintain plant utilization rates and to implement planned capacity additions and expansions; 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; market acceptance of our technology; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather or natural disasters; potential liability for remedial actions and increased costs under existing or future environmental regulations, including those relating to climate change; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies of governments or other governmental activities in the countries in which we operate; changes in currency exchange rates and interest rates; our level of indebtedness, which could diminish our ability to raise additional capital to fund operations or limit our ability to react to changes in the economy or the chemicals industry; and various other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Non-GAAP Financial Measures

Presentation

This document presents the Company's three business segments, Engineered Materials, Acetate Tow and Acetyl Chain.

Use of Non-US GAAP Financial Information

This release uses the following Non-US GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, adjusted earnings per share and free cash flow. These measures are not recognized in accordance with US GAAP and should not be viewed as an alternative to US GAAP measures of performance or liquidity. The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by (used in) operations.

Definitions of Non-US GAAP Financial Measures

  • Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8 of our Non-US GAAP Financial Measures and Supplemental Information document). We do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales.
  • Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization.
  • Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

    Note: The income tax expense (benefit) on Certain Items ("Non-GAAP adjustments") is determined using the applicable rates in the taxing jurisdictions in which the Non-GAAP adjustments occurred and includes both current and deferred income tax expense (benefit). The income tax rate used for adjusted earnings per share approximates the midpoint in a range of forecasted tax rates for the year. This range may include certain partial or full-year forecasted tax opportunities and related costs, where applicable, and specifically excludes changes in uncertain tax positions, discrete recognition of GAAP items on a quarterly basis, other pre-tax items adjusted out of our GAAP earnings for adjusted earnings per share purposes and changes in management's assessments regarding the ability to realize deferred tax assets for GAAP. In determining the adjusted earnings per share tax rate, we reflect the impact of foreign tax credits when utilized, or expected to be utilized, absent discrete events impacting the timing of foreign tax credit utilization. We analyze this rate quarterly and adjust it if there is a material change in the range of forecasted tax rates; an updated forecast would not necessarily result in a change to our tax rate used for adjusted earnings per share. The adjusted tax rate is an estimate and may differ from the actual tax rate used for GAAP reporting in any given reporting period. Table 3a of our Non-US GAAP Financial Measures and Supplemental Information document summarizes the reconciliation of our estimated GAAP effective tax rate to the adjusted tax rate. The estimated GAAP rate excludes discrete recognition of GAAP items due to our inability to forecast such items. As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate to the adjusted tax rate for actual results.
  • Free cash flow is a liquidity measure used by the Company and is defined by the Company as cash flow from operations, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway Methanol LLC ("Fairway").

Reconciliation of Non-US GAAP Financial Measures

Reconciliations of the Non-US GAAP financial measures used in this press release to the comparable US GAAP financial measure, together with information about the purposes and uses of Non-US GAAP financial measures, are included in our Non-US GAAP Financial Measures and Supplemental Information document filed as an exhibit to our Current Report on Form 8-K filed with the SEC on or about October 21, 2019 and also available on our website at investors.celanese.com under Financial Information/Non-GAAP Financial Measures.

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

 

September 30,
2019

 

June 30,
2019

 

September 30,
2018

 

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

Net sales

1,586

 

 

1,592

 

 

1,771

 

Cost of sales

(1,172

)

 

(1,169

)

 

(1,255

)

Gross profit

414

 

 

423

 

 

516

 

Selling, general and administrative expenses

(120

)

 

(118

)

 

(129

)

Amortization of intangible assets

(6

)

 

(6

)

 

(5

)

Research and development expenses

(17

)

 

(17

)

 

(18

)

Other (charges) gains, net

(7

)

 

(98

)

 

12

 

Foreign exchange gain (loss), net

(1

)

 

1

 

 

 

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

(3

)

 

1

 

 

(2

)

Operating profit (loss)

260

 

 

186

 

 

374

 

Equity in net earnings (loss) of affiliates

45

 

 

39

 

 

66

 

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

17

 

 

17

 

 

25

 

Interest expense

(27

)

 

(29

)

 

(30

)

Refinancing expense

 

 

(4

)

 

 

Interest income

1

 

 

2

 

 

2

 

Dividend income - equity investments

27

 

 

30

 

 

26

 

Other income (expense), net

 

 

(2

)

 

(1

)

Earnings (loss) from continuing operations before tax

323

 

 

239

 

 

462

 

Income tax (provision) benefit

(53

)

 

(28

)

 

(54

)

Earnings (loss) from continuing operations

270

 

 

211

 

 

408

 

Earnings (loss) from operation of discontinued operations

(6

)

 

(2

)

 

(7

)

Income tax (provision) benefit from discontinued operations

1

 

 

1

 

 

1

 

Earnings (loss) from discontinued operations

(5

)

 

(1

)

 

(6

)

Net earnings (loss)

265

 

 

210

 

 

402

 

Net (earnings) loss attributable to noncontrolling interests

(2

)

 

(1

)

 

(1

)

Net earnings (loss) attributable to Celanese Corporation

263

 

 

209

 

 

401

 

Amounts attributable to Celanese Corporation

 

 

 

 

 

Earnings (loss) from continuing operations

268

 

 

210

 

 

407

 

Earnings (loss) from discontinued operations

(5

)

 

(1

)

 

(6

)

Net earnings (loss)

263

 

 

209

 

 

401

 

Earnings (loss) per common share - basic

 

 

 

 

 

Continuing operations

2.18

 

 

1.68

 

 

3.02

 

Discontinued operations

(0.04

)

 

(0.01

)

 

(0.04

)

Net earnings (loss) - basic

2.14

 

 

1.67

 

 

2.98

 

Earnings (loss) per common share - diluted

 

 

 

 

 

Continuing operations

2.17

 

 

1.67

 

 

3.00

 

Discontinued operations

(0.04

)

 

(0.01

)

 

(0.04

)

Net earnings (loss) - diluted

2.13

 

 

1.66

 

 

2.96

 

Weighted average shares (in millions)

 

 

 

 

 

Basic

122.7

 

 

125.3

 

 

134.5

 

Diluted

123.3

 

 

125.8

 

 

135.5

 

Consolidated Balance Sheets - Unaudited

 

 

As of
September 30,
2019

 

As of
December 31,
2018

 

(In $ millions)

ASSETS

 

 

 

Current Assets

 

 

 

Cash and cash equivalents

497

 

 

439

 

Trade receivables - third party and affiliates, net

947

 

 

1,017

 

Non-trade receivables, net

335

 

 

301

 

Inventories

994

 

 

1,046

 

Marketable securities, at fair value

26

 

 

31

 

Other assets

44

 

 

40

 

Total current assets

2,843

 

 

2,874

 

Investments in affiliates

970

 

 

979

 

Property, plant and equipment, net

3,585

 

 

3,719

 

Operating lease right-of-use assets

206

 

 

 

Deferred income taxes

98

 

 

84

 

Other assets

344

 

 

290

 

Goodwill

1,054

 

 

1,057

 

Intangible assets, net

314

 

 

310

 

Total assets

9,414

 

 

9,313

 

LIABILITIES AND EQUITY

 

 

 

Current Liabilities

 

 

 

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

368

 

 

561

 

Trade payables - third party and affiliates

764

 

 

819

 

Other liabilities

358

 

 

343

 

Income taxes payable

43

 

 

56

 

Total current liabilities

1,533

 

 

1,779

 

Long-term debt, net of unamortized deferred financing costs

3,359

 

 

2,970

 

Deferred income taxes

269

 

 

255

 

Uncertain tax positions

169

 

 

158

 

Benefit obligations

523

 

 

564

 

Operating lease liabilities

182

 

 

 

Other liabilities

240

 

 

208

 

Commitments and Contingencies

 

 

 

Stockholders' Equity

 

 

 

Treasury stock, at cost

(3,622

)

 

(2,849

)

Additional paid-in capital

244

 

 

233

 

Retained earnings

6,431

 

 

5,847

 

Accumulated other comprehensive income (loss), net

(306

)

 

(247

)

Total Celanese Corporation stockholders' equity

2,747

 

 

2,984

 

Noncontrolling interests

392

 

 

395

 

Total equity

3,139

 

 

3,379

 

Total liabilities and equity

9,414

 

 

9,313

 

Non-US GAAP Financial Measures and Supplemental Information

October 21, 2019

In this document, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a consolidated basis.

Purpose

The purpose of this document is to provide information of interest to investors, analysts and other parties including supplemental financial information and reconciliations and other information concerning our use of non-US GAAP financial measures. This document is updated quarterly.

Presentation

This document presents the Company's three business segments, Engineered Materials, Acetate Tow and Acetyl Chain.

Use of Non-US GAAP Financial Measures

From time to time, management may publicly disclose certain numerical "non-GAAP financial measures" in the course of our earnings releases, financial presentations, earnings conference calls, investor and analyst meetings and otherwise. For these purposes, the Securities and Exchange Commission ("SEC") defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with US GAAP, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable US GAAP measure so calculated and presented. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States.

Non-GAAP financial measures disclosed by management are provided as additional information to investors, analysts and other parties because the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other US GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Financial Information/Financial Document Library page of our website, investors.celanese.com. The definition and method of calculation of the non-GAAP financial measures used herein may be different from other companies' methods for calculating measures with the same or similar titles. Investors, analysts and other parties should understand how another company calculates such non-GAAP financial measures before comparing the other company's non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.

Pursuant to the requirements of SEC Regulation G, whenever we refer to a non-GAAP financial measure, we will also present in this document, in the presentation itself or on a Form 8-K in connection with the presentation on the Financial Information/Non-GAAP Financial Measures 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 capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway Methanol LLC ("Fairway"). We believe that free cash flow provides useful information to management, investors, analysts and other parties in evaluating the Company's liquidity and credit quality assessment because it provides an indication of the long-term cash generating ability of our business. Although we use free cash flow as a measure to assess the liquidity generated by our business, the use of free cash flow has important limitations, including that free cash flow does not reflect the cash requirements necessary to service our indebtedness, lease obligations, unconditional purchase obligations or pension and postretirement funding obligations.
  • Net debt is defined by the Company as total debt less cash and cash equivalents. We believe that net debt provides useful information to management, investors, analysts and other parties in evaluating changes to the Company's capital structure and credit quality assessment.
  • Return on invested capital (adjusted) is defined by the Company as adjusted EBIT, tax effected using the adjusted tax rate, divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity. We believe that return on invested capital (adjusted) provides useful information to management, investors, analysts and other parties in order to assess our income generation from the point of view of our stockholders and creditors who provide us with capital in the form of equity and debt and whether capital invested in the Company yields competitive returns.

Supplemental Information

Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:

  • Net sales for each of our business segments and the percentage increase or decrease in net sales attributable to price, volume, currency and other factors for each of our business segments.
  • Cash dividends received from our equity investments.
  • For those consolidated ventures in which the Company owns or is exposed to less than 100% of the economics, the outside stockholders' interests are shown as NCI. Beginning in 2014, this includes Fairway for which the Company's ownership percentage is 50%. Amounts referred to as "attributable to Celanese Corporation" are net of any applicable NCI.

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Table 1

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

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

263

 

 

209

 

 

337

 

 

1,207

 

 

99

 

 

401

 

 

344

 

 

363

 

(Earnings) loss from discontinued operations

5

 

 

1

 

 

1

 

 

5

 

 

(3

)

 

6

 

 

 

 

2

 

Interest income

(1

)

 

(2

)

 

(1

)

 

(6

)

 

(2

)

 

(2

)

 

 

 

(2

)

Interest expense

27

 

 

29

 

 

31

 

 

125

 

 

30

 

 

30

 

 

32

 

 

33

 

Refinancing expense

 

 

4

 

 

 

 

1

 

 

1

 

 

 

 

 

 

 

Income tax provision (benefit)

53

 

 

28

 

 

46

 

 

292

 

 

76

 

 

54

 

 

97

 

 

65

 

Certain Items attributable to Celanese Corporation (Table 8)

29

 

 

107

 

 

7

 

 

228

 

 

192

 

 

5

 

 

18

 

 

13

 

Adjusted EBIT

376

 

 

376

 

 

421

 

 

1,852

 

 

393

 

 

494

 

 

491

 

 

474

 

Depreciation and amortization expense(1)

82

 

 

82

 

 

81

 

 

316

 

 

78

 

 

77

 

 

82

 

 

79

 

Operating EBITDA

458

 

 

458

 

 

502

 

 

2,168

 

 

471

 

 

571

 

 

573

 

 

553

 

 

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions)

Engineered Materials

1

 

 

 

 

1

 

 

1

 

 

 

 

 

 

1

 

 

 

Acetate Tow

5

 

 

2

 

 

 

 

19

 

 

5

 

 

11

 

 

3

 

 

 

Acetyl Chain

6

 

 

 

 

1

 

 

7

 

 

5

 

 

2

 

 

 

 

 

Other Activities(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accelerated depreciation and amortization expense

12

 

 

2

 

 

2

 

 

27

 

 

10

 

 

13

 

 

4

 

 

 

Depreciation and amortization expense(1)

82

 

 

82

 

 

81

 

 

316

 

 

78

 

 

77

 

 

82

 

 

79

 

Total depreciation and amortization expense

94

 

 

84

 

 

83

 

 

343

 

 

88

 

 

90

 

 

86

 

 

79

 

______________________________

(1)

 

Excludes accelerated depreciation and amortization expense as detailed in the table above, which amounts are included in Certain Items above.

(2)

 

Other Activities includes corporate Selling, general and administrative ("SG&A") expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

111

 

 

18.8

%

 

103

 

 

17.4

%

 

144

 

 

21.7

%

 

460

 

 

17.7

%

 

95

 

 

15.3

%

 

124

 

 

19.3

%

 

114

 

 

17.2

%

 

127

 

 

19.1

%

Acetate Tow

34

 

 

21.5

%

 

(44

)

 

(26.8

)%

 

40

 

 

24.1

%

 

130

 

 

20.0

%

 

19

 

 

11.8

%

 

26

 

 

16.5

%

 

39

 

 

24.1

%

 

46

 

 

27.4

%

Acetyl Chain(1)

180

 

 

20.8

%

 

188

 

 

21.7

%

 

202

 

 

22.7

%

 

1,024

 

 

25.3

%

 

211

 

 

22.5

%

 

287

 

 

28.5

%

 

273

 

 

26.0

%

 

253

 

 

24.1

%

Other Activities(2)

(65

)

 

 

 

(61

)

 

 

 

(66

)

 

 

 

(280

)

 

 

 

(66

)

 

 

 

(63

)

 

 

 

(68

)

 

 

 

(83

)

 

 

Total

260

 

 

16.4

%

 

186

 

 

11.7

%

 

320

 

 

19.0

%

 

1,334

 

 

18.6

%

 

259

 

 

15.3

%

 

374

 

 

21.1

%

 

358

 

 

19.4

%

 

343

 

 

18.5

%

Less: Net Earnings (Loss) Attributable to NCI(1)

2

 

 

 

 

1

 

 

 

 

1

 

 

 

 

6

 

 

 

 

2

 

 

 

 

1

 

 

 

 

1

 

 

 

 

2

 

 

 

Operating Profit (Loss) Attributable to Celanese Corporation

258

 

 

16.3

%

 

185

 

 

11.6

%

 

319

 

 

18.9

%

 

1,328

 

 

18.6

%

 

257

 

 

15.2

%

 

373

 

 

21.1

%

 

357

 

 

19.4

%

 

341

 

 

18.4

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

111

 

 

18.8

%

 

103

 

 

17.4

%

 

144

 

 

21.7

%

 

460

 

 

17.7

%

 

95

 

 

15.3

%

 

124

 

 

19.3

%

 

114

 

 

17.2

%

 

127

 

 

19.1

%

Acetate Tow

34

 

 

21.5

%

 

(44

)

 

(26.8

)%

 

40

 

 

24.1

%

 

130

 

 

20.0

%

 

19

 

 

11.8

%

 

26

 

 

16.5

%

 

39

 

 

24.1

%

 

46

 

 

27.4

%

Acetyl Chain(1)

178

 

 

20.5

%

 

187

 

 

21.6

%

 

201

 

 

22.6

%

 

1,018

 

 

25.2

%

 

209

 

 

22.3

%

 

286

 

 

28.4

%

 

272

 

 

25.9

%

 

251

 

 

23.9

%

Other Activities(2)

(65

)

 

 

 

(61

)

 

 

 

(66

)

 

 

 

(280

)

 

 

 

(66

)

 

 

 

(63

)

 

 

 

(68

)

 

 

 

(83

)

 

 

Total

258

 

 

16.3

%

 

185

 

 

11.6

%

 

319

 

 

18.9

%

 

1,328

 

 

18.6

%

 

257

 

 

15.2

%

 

373

 

 

21.1

%

 

357

 

 

19.4

%

 

341

 

 

18.4

%

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

41

 

 

 

 

36

 

 

 

 

46

 

 

 

 

219

 

(3)

 

49

 

 

 

 

62

 

 

 

 

54

 

 

 

 

54

 

 

 

Acetate Tow

27

 

 

 

 

29

 

 

 

 

32

 

 

 

 

116

 

 

 

 

25

 

 

 

 

26

 

 

 

 

33

 

 

 

 

32

 

 

 

Acetyl Chain

2

 

 

 

 

1

 

 

 

 

1

 

 

 

 

8

 

 

 

 

1

 

 

 

 

2

 

 

 

 

3

 

 

 

 

2

 

 

 

Other Activities(2)

2

 

 

 

 

1

 

 

 

 

(1

)

 

 

 

15

 

 

 

 

8

 

 

 

 

1

 

 

 

 

 

 

 

 

6

 

 

 

Total

72

 

 

 

 

67

 

 

 

 

78

 

 

 

 

358

 

 

 

 

83

 

 

 

 

91

 

 

 

 

90

 

 

 

 

94

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acetate Tow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acetyl Chain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Activities(2)

17

 

 

 

 

17

 

 

 

 

17

 

 

 

 

(62

)

 

 

 

(139

)

 

 

 

25

 

 

 

 

26

 

 

 

 

26

 

 

 

Total

17

 

 

 

 

17

 

 

 

 

17

 

 

 

 

(62

)

 

 

 

(139

)

 

 

 

25

 

 

 

 

26

 

 

 

 

26

 

 

 

Certain Items Attributable to Celanese Corporation(Table 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

2

 

 

 

 

9

 

 

 

 

(7

)

 

 

 

15

 

 

 

 

6

 

 

 

 

1

 

 

 

 

7

 

 

 

 

1

 

 

 

Acetate Tow

10

 

 

 

 

86

 

 

 

 

 

 

 

 

27

 

 

 

 

9

 

 

 

 

13

 

 

 

 

5

 

 

 

 

 

 

 

Acetyl Chain

11

 

 

 

 

1

 

 

 

 

1

 

 

 

 

(4

)

 

 

 

5

 

 

 

 

(11

)

 

 

 

2

 

 

 

 

 

 

 

Other Activities(2)

6

 

 

 

 

11

 

 

 

 

13

 

 

 

 

190

 

 

 

 

172

 

 

 

 

2

 

 

 

 

4

 

 

 

 

12

 

 

 

Total

29

 

 

 

 

107

 

 

 

 

7

 

 

 

 

228

 

 

 

 

192

 

 

 

 

5

 

 

 

 

18

 

 

 

 

13

 

 

 

Adjusted EBIT / Adjusted EBIT Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

154

 

 

26.1

%

 

148

 

 

25.0

%

 

183

 

 

27.6

%

 

694

 

 

26.8

%

 

150

 

 

24.1

%

 

187

 

 

29.1

%

 

175

 

 

26.4

%

 

182

 

 

27.4

%

Acetate Tow

71

 

 

44.9

%

 

71

 

 

43.3

%

 

72

 

 

43.4

%

 

273

 

 

42.1

%

 

53

 

 

32.9

%

 

65

 

 

41.1

%

 

77

 

 

47.5

%

 

78

 

 

46.4

%

Acetyl Chain

191

 

 

22.0

%

 

189

 

 

21.8

%

 

203

 

 

22.8

%

 

1,022

 

 

25.3

%

 

215

 

 

23.0

%

 

277

 

 

27.5

%

 

277

 

 

26.4

%

 

253

 

 

24.1

%

Other Activities(2)

(40

)

 

 

 

(32

)

 

 

 

(37

)

 

 

 

(137

)

 

 

 

(25

)

 

 

 

(35

)

 

 

 

(38

)

 

 

 

(39

)

 

 

Total

376

 

 

23.7

%

 

376

 

 

23.6

%

 

421

 

 

25.0

%

 

1,852

 

 

25.9

%

 

393

 

 

23.3

%

 

494

 

 

27.9

%

 

491

 

 

26.6

%

 

474

 

 

25.6

%

______________________________

(1)

Net earnings (loss) attributable to NCI is included within the Acetyl Chain segment.

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

(3)

Includes $218 million of Equity in net earnings (loss) of affiliates and $1 million of Other income.

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.)

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

32

 

 

 

 

31

 

 

 

 

31

 

 

 

 

125

 

 

 

 

30

 

 

 

 

31

 

 

 

 

32

 

 

 

 

32

 

 

 

Acetate Tow

9

 

 

 

 

9

 

 

 

 

10

 

 

 

 

39

 

 

 

 

9

 

 

 

 

10

 

 

 

 

10

 

 

 

 

10

 

 

 

Acetyl Chain

37

 

 

 

 

38

 

 

 

 

37

 

 

 

 

141

 

 

 

 

36

 

 

 

 

34

 

 

 

 

36

 

 

 

 

35

 

 

 

Other Activities(2)

4

 

 

 

 

4

 

 

 

 

3

 

 

 

 

11

 

 

 

 

3

 

 

 

 

2

 

 

 

 

4

 

 

 

 

2

 

 

 

Total

82

 

 

 

 

82

 

 

 

 

81

 

 

 

 

316

 

 

 

 

78

 

 

 

 

77

 

 

 

 

82

 

 

 

 

79

 

 

 

Operating EBITDA / Operating EBITDA Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Engineered Materials

186

 

 

31.5

%

 

179

 

 

30.2

%

 

214

 

 

32.3

%

 

819

 

 

31.6

%

 

180

 

 

28.9

%

 

218

 

 

34.0

%

 

207

 

 

31.2

%

 

214

 

 

32.2

%

Acetate Tow

80

 

 

50.6

%

 

80

 

 

48.8

%

 

82

 

 

49.4

%

 

312

 

 

48.1

%

 

62

 

 

38.5

%

 

75

 

 

47.5

%

 

87

 

 

53.7

%

 

88

 

 

52.4

%

Acetyl Chain

228

 

 

26.3

%

 

227

 

 

26.2

%

 

240

 

 

27.0

%

 

1,163

 

 

28.8

%

 

251

 

 

26.8

%

 

311

 

 

30.9

%

 

313

 

 

29.8

%

 

288

 

 

27.4

%

Other Activities(2)

(36

)

 

 

 

(28

)

 

 

 

(34

)

 

 

 

(126

)

 

 

 

(22

)

 

 

 

(33

)

 

 

 

(34

)

 

 

 

(37

)

 

 

Total

458

 

 

28.9

%

 

458

 

 

28.8

%

 

502

 

 

29.8

%

 

2,168

 

 

30.3

%

 

471

 

 

27.9

%

 

571

 

 

32.2

%

 

573

 

 

31.1

%

 

553

 

 

29.9

%

___________________________

(1)

 

Excludes accelerated depreciation and amortization expense, which amounts are included in Certain Items above. See Table 1 for details.

(2)

 

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 3

Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

 

 

per share

 

 

 

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

268

 

 

2.17

 

 

210

 

 

1.67

 

 

338

 

 

2.64

 

 

1,212

 

 

8.95

 

 

96

 

 

0.73

 

 

407

 

 

3.00

 

 

344

 

 

2.52

 

 

365

 

 

2.68

 

Income tax provision (benefit)

53

 

 

 

 

28

 

 

 

 

46

 

 

 

 

292

 

 

 

 

76

 

 

 

 

54

 

 

 

 

97

 

 

 

 

65

 

 

 

Earnings (loss) from continuing operations before tax

321

 

 

 

 

238

 

 

 

 

384

 

 

 

 

1,504

 

 

 

 

172

 

 

 

 

461

 

 

 

 

441

 

 

 

 

430

 

 

 

Certain Items attributable to Celanese Corporation(Table 8)

29

 

 

 

 

107

 

 

 

 

7

 

 

 

 

228

 

 

 

 

192

 

 

 

 

5

 

 

 

 

18

 

 

 

 

13

 

 

 

Refinancing and related expenses

 

 

 

 

4

 

 

 

 

 

 

 

 

1

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings (loss) from continuing operations before tax

350

 

 

 

 

349

 

 

 

 

391

 

 

 

 

1,733

 

 

 

 

365

 

 

 

 

466

 

 

 

 

459

 

 

 

 

443

 

 

 

Income tax (provision) benefit on adjusted earnings(1)

(38

)

 

 

 

(49

)

 

 

 

(55

)

 

 

 

(243

)

 

 

 

(51

)

 

 

 

(65

)

 

 

 

(64

)

 

 

 

(62

)

 

 

Adjusted earnings (loss) from continuing operations(2)

312

 

 

2.53

 

 

300

 

 

2.38

 

 

336

 

 

2.62

 

 

1,490

 

 

11.00

 

 

314

 

 

2.38

 

 

401

 

 

2.96

 

 

395

 

 

2.90

 

 

381

 

 

2.79

 

 

Diluted shares (in millions)(3)

Weighted average shares outstanding

122.7

 

 

 

 

125.3

 

 

 

 

127.5

 

 

 

 

134.3

 

 

 

 

131.2

 

 

 

 

134.5

 

 

 

 

135.6

 

 

 

 

135.9

 

 

 

Incremental shares attributable to equity awards

0.6

 

 

 

 

0.5

 

 

 

 

0.7

 

 

 

 

1.1

 

 

 

 

0.9

 

 

 

 

1.0

 

 

 

 

0.7

 

 

 

 

0.5

 

 

 

Total diluted shares

123.3

 

 

 

 

125.8

 

 

 

 

128.2

 

 

 

 

135.4

 

 

 

 

132.1

 

 

 

 

135.5

 

 

 

 

136.3

 

 

 

 

136.4

 

 

 

______________________________

(1)

 

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

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In percentages)

Adjusted effective tax rate

11

 

 

 

 

14

 

 

 

 

14

 

 

 

 

14

 

 

 

 

14

 

 

 

 

14

 

 

 

 

14

 

 

 

 

14

 

 

 

 

(2)

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)

2018

 

(3.9

)

 

6.7

 

 

(3)

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

 

2019

 

2018

 

(In percentages)

US GAAP annual effective tax rate

14

 

 

19

 

Utilization of foreign tax credits

(3

)

 

 

Changes in valuation allowances, excluding impact of other charges and adjustments(1)

1

 

 

(5

)

Other(2)

1

 

 

 

Adjusted tax rate

13

 

 

14

 

______________________________

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

(1)

 

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.

(2)

 

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

Table 4

Net Sales by Segment - Unaudited

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions)

Engineered Materials

591

 

 

593

 

 

663

 

 

2,593

 

 

622

 

 

642

 

 

664

 

 

665

 

Acetate Tow

158

 

 

164

 

 

166

 

 

649

 

 

161

 

 

158

 

 

162

 

 

168

 

Acetyl Chain

867

 

 

865

 

 

889

 

 

4,042

 

 

936

 

 

1,006

 

 

1,049

 

 

1,051

 

Intersegment eliminations(1)

(30

)

 

(30

)

 

(31

)

 

(129

)

 

(30

)

 

(35

)

 

(31

)

 

(33

)

Net sales

1,586

 

 

1,592

 

 

1,687

 

 

7,155

 

 

1,689

 

 

1,771

 

 

1,844

 

 

1,851

 

___________________________

(1)

 

Includes intersegment sales primarily related to the Acetyl Chain.

Table 4a

Factors Affecting Segment Net Sales Sequentially - Unaudited

Three Months Ended September 30, 2019 Compared to Three Months Ended June 30, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

2

 

 

(2

)

 

(1

)

 

 

 

(1

)

 

Acetate Tow

(2

)

 

(1

)

 

 

 

 

 

(3

)

 

Acetyl Chain

1

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

2

 

 

(1

)

 

(1

)

 

 

 

 

 

Three Months Ended June 30, 2019 Compared to Three Months Ended March 31, 2019

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(7

)

 

(3

)

 

(1

)

 

 

 

(11

)

 

Acetate Tow

(1

)

 

 

 

 

 

 

 

(1

)

 

Acetyl Chain

2

 

 

(4

)

 

(1

)

 

 

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

(3

)

 

(1

)

 

 

 

(6

)

 

Three Months Ended March 31, 2019 Compared to Three Months Ended December 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

5

 

 

2

 

 

 

 

 

 

7

 

(1)

Acetate Tow

1

 

 

2

 

 

 

 

 

 

3

 

 

Acetyl Chain

5

 

 

(10

)

 

 

 

 

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

5

 

 

(5

)

 

 

 

 

 

 

 

Three Months Ended December 31, 2018 Compared to Three Months Ended September 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(4

)

 

2

 

 

(1

)

 

 

 

(3

)

 

Acetate Tow

2

 

 

(1

)

 

 

 

 

 

1

 

 

Acetyl Chain

(3

)

 

(4

)

 

(1

)

 

1

 

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(2

)

 

(1

)

 

1

 

 

(5

)

 

Three Months Ended September 30, 2018 Compared to Three Months Ended June 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(2

)

 

 

 

(1

)

 

 

 

(3

)

 

Acetate Tow

(2

)

 

 

 

 

 

 

 

(2

)

 

Acetyl Chain

(4

)

 

2

 

 

(2

)

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

1

 

 

(2

)

 

 

 

(4

)

 

Three Months Ended June 30, 2018 Compared to Three Months Ended March 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

(1

)

 

3

 

 

(2

)

 

 

 

 

 

Acetate Tow

(3

)

 

 

 

(1

)

 

 

 

(4

)

 

Acetyl Chain

(2

)

 

4

 

 

(1

)

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

(2

)

 

3

 

 

(1

)

 

 

 

 

 

Three Months Ended March 31, 2018 Compared to Three Months Ended December 31, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

 

(In percentages)

 

Engineered Materials

10

 

 

3

 

 

2

 

 

 

 

15

 

(2)

Acetate Tow

8

 

 

 

 

 

 

 

 

8

 

 

Acetyl Chain

8

 

 

9

 

 

3

 

 

(2

)

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

9

 

 

6

 

 

2

 

 

(1

)

 

16

 

 

_________________________

(1)

 

2019 includes the effect of the acquisition of Next Polymers Ltd.

(2)

 

2018 includes the effect of the acquisition of Omni Plastics, L.L.C.

Table 4b

Factors Affecting Segment Net Sales Year Over Year - Unaudited

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(4

)

 

(2

)

 

(2

)

 

 

 

(8

)

Acetate Tow

 

 

 

 

 

 

 

 

 

Acetyl Chain

6

 

 

(18

)

 

(2

)

 

 

 

(14

)

 

 

 

 

 

 

 

 

 

 

Total Company

2

 

 

(11

)

 

(2

)

 

1

 

 

(10

)

Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(8

)

 

 

 

(3

)

 

 

 

(11

)

Acetate Tow

1

 

 

1

 

 

(1

)

 

 

 

1

 

Acetyl Chain

(1

)

 

(14

)

 

(3

)

 

 

 

(18

)

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(8

)

 

(3

)

 

 

 

(14

)

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

(3

)

 

7

 

 

(4

)

 

 

 

 

Acetate Tow

(1

)

 

 

 

 

 

 

 

(1

)

Acetyl Chain

(4

)

 

(8

)

 

(3

)

 

 

 

(15

)

 

 

 

 

 

 

 

 

 

 

Total Company

(3

)

 

(2

)

 

(4

)

 

 

 

(9

)

Three Months Ended December 31, 2018 Compared to Three Months Ended December 31, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

2

 

 

7

 

 

(2

)

 

 

 

7

 

Acetate Tow

5

 

 

(2

)

 

 

 

 

 

3

 

Acetyl Chain

(2

)

 

10

 

 

(2

)

 

(1

)

 

5

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

8

 

 

(2

)

 

 

 

6

 

Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

7

 

 

6

 

 

(1

)

 

 

 

12

 

Acetate Tow

5

 

 

(3

)

 

 

 

(1

)

 

1

 

Acetyl Chain

(3

)

 

22

 

 

 

 

(2

)

 

17

 

 

 

 

 

 

 

 

 

 

 

Total Company

1

 

 

14

 

 

(1

)

 

(1

)

 

13

 

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

11

 

 

7

 

 

4

 

 

 

 

22

 

Acetate Tow

1

 

 

(2

)

 

 

 

 

 

(1

)

Acetyl Chain

6

 

 

19

 

 

5

 

 

(3

)

 

27

 

 

 

 

 

 

 

 

 

 

 

Total Company

7

 

 

13

 

 

4

 

 

(2

)

 

22

 

Three Months Ended March 31, 2018 Compared to Three Months Ended March 31, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

19

 

 

3

 

 

7

 

 

 

 

29

 

Acetate Tow

(9

)

 

(4

)

 

1

 

 

 

 

(12

)

Acetyl Chain

3

 

 

25

 

 

7

 

 

(3

)

 

32

 

 

 

 

 

 

 

 

 

 

 

Total Company

7

 

 

14

 

 

6

 

 

(1

)

 

26

 

Table 4c

Factors Affecting Segment Net Sales Year Over Year - Unaudited

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

 

Volume

 

Price

 

Currency

 

Other

 

Total

 

(In percentages)

Engineered Materials

9

 

 

6

 

 

2

 

 

 

 

17

 

Acetate Tow

 

 

(3

)

 

 

 

 

 

(3

)

Acetyl Chain

1

 

 

19

 

 

2

 

 

(2

)

 

20

 

 

 

 

 

 

 

 

 

 

 

Total Company

4

 

 

12

 

 

2

 

 

(1

)

 

17

 

Table 5

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

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions, except percentages)

Net cash provided by (used in) investing activities

(82

)

 

(66

)

 

(177

)

 

(507

)

 

(98

)

 

(78

)

 

(96

)

 

(235

)

Net cash provided by (used in) financing activities

(299

)

 

(307

)

 

(130

)

 

(1,165

)

 

(526

)

 

(383

)

 

(254

)

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

397

 

 

424

 

 

307

 

 

1,558

 

 

363

 

 

467

 

 

585

 

 

143

 

Capital expenditures on property, plant and equipment

(82

)

 

(65

)

 

(79

)

 

(337

)

 

(93

)

 

(79

)

 

(79

)

 

(86

)

Capital (distributions to) contributions from NCI

 

 

(3

)

 

(4

)

 

(23

)

 

(9

)

 

(6

)

 

(6

)

 

(2

)

Free cash flow(1)(2)

315

 

 

356

 

 

224

 

 

1,198

 

 

261

 

 

382

 

 

500

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

1,586

 

 

1,592

 

 

1,687

 

 

7,155

 

 

1,689

 

 

1,771

 

 

1,844

 

 

1,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow as % of Net sales

19.9

%

 

22.4

%

 

13.3

%

 

16.7

%

 

15.5

%

 

21.6

%

 

27.1

%

 

3.0

%

______________________________

(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 capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our joint venture, Fairway Methanol LLC ("Fairway").

(2)

 

Excludes required debt service and finance lease payments of $24 million and $63 million for the years ending December 31, 2019 and 2018, respectively.

Table 6

Cash Dividends Received - Unaudited

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions)

Dividends from equity method investments

15

 

 

41

 

 

70

 

 

221

 

 

62

 

 

44

 

 

39

 

 

76

 

Dividends from equity investments without readily determinable fair values

27

 

 

30

 

 

32

 

 

117

 

 

25

 

 

26

 

 

34

 

 

32

 

Total

42

 

 

71

 

 

102

 

 

338

 

 

87

 

 

70

 

 

73

 

 

108

 

Table 7

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

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

(In $ millions)

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

368

 

 

319

 

 

743

 

 

561

 

 

561

 

 

229

 

 

366

 

 

425

 

Long-term debt, net of unamortized deferred financing costs

3,359

 

 

3,444

 

 

2,933

 

 

2,970

 

 

2,970

 

 

3,196

 

 

3,228

 

 

3,343

 

Total debt

3,727

 

 

3,763

 

 

3,676

 

 

3,531

 

 

3,531

 

 

3,425

 

 

3,594

 

 

3,768

 

Cash and cash equivalents

(497

)

 

(491

)

 

(441

)

 

(439

)

 

(439

)

 

(703

)

 

(708

)

 

(490

)

Net debt

3,230

 

 

3,272

 

 

3,235

 

 

3,092

 

 

3,092

 

 

2,722

 

 

2,886

 

 

3,278

 

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:

 

Q3 '19

 

Q2 '19

 

Q1 '19

 

2018

 

Q4 '18

 

Q3 '18

 

Q2 '18

 

Q1 '18

 

Income Statement Classification

 

(In $ millions)

 

 

Plant/office closures

9

 

 

2

 

 

3

 

 

19

 

 

16

 

 

 

 

3

 

 

 

 

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

Asset impairments

9

 

 

83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales / Other charges (gains), net

Mergers and acquisitions

2

 

 

4

 

 

3

 

 

33

 

 

6

 

 

3

 

 

11

 

 

13

 

 

Cost of sales / SG&A

Actuarial (gain) loss on pension and postretirement plans

 

 

 

 

 

 

166

 

 

166

 

 

 

 

 

 

 

 

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

Restructuring

7

 

 

15

 

 

(1

)

 

9

 

 

4

 

 

2

 

 

3

 

 

 

 

SG&A / Other charges (gains), net / Non-operating pension and other postretirement employee benefit expense (income)

Other

2

 

 

3

 

 

2

 

 

1

 

 

 

 

 

 

1

 

 

 

 

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

Certain Items attributable to Celanese Corporation

29

 

 

107

 

 

7

 

 

228

 

 

192

 

 

5

 

 

18

 

 

13

 

 

 

Table 9

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

 

 

 

 

 

2018

 

 

 

 

 

(In $ millions,
except percentages)

Net earnings (loss) attributable to Celanese Corporation

 

 

 

 

1,207

 

 

 

 

 

 

 

Adjusted EBIT(Table 1)

 

 

 

 

1,852

 

Adjusted effective tax rate (Table 3a)

 

 

 

 

14

%

Adjusted EBIT tax effected

 

 

 

 

1,593

 

 

 

 

 

 

 

 

2018

 

2017

 

Average

 

(In $ millions, except percentages)

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

561

 

 

326

 

 

444

 

Long-term debt, net of unamortized deferred financing costs

2,970

 

 

3,315

 

 

3,143

 

Celanese Corporation stockholders' equity

2,984

 

 

2,887

 

 

2,936

 

Invested capital

 

 

 

 

6,523

 

 

 

 

 

 

 

Return on invested capital (adjusted)

 

 

 

 

24.4

%

 

 

 

 

 

 

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

 

 

 

 

18.5

%

 

Source: Celanese Corporation

Investor Relations
Chuck Kyrish
Phone: +1 972 443 4574
Chuck.Kyrish@celanese.com

Media - U.S.
Travis Jacobsen
Phone: +1 972 443 3750
William.Jacobsen@celanese.com

Media - Europe
Jens Kurth
Phone: +49(0)69 45009 1574
J.Kurth@celanese.com