Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Celanese Corp | q420178-kex992.htm |
| EX-99.1(A) - EXHIBIT 99.1(A) - Celanese Corp | q420178-kex991a.htm |
| 8-K - 8-K - Celanese Corp | q420178-kdocslidesscripts.htm |
Celanese Corporation Q4 Earnings Release 1
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Conference Call / Webcast
Friday, January 26, 2018 11:00 a.m. Eastern Time
Celanese Q4 & FY 2017 Earnings
Exhibit 99.1(b)
Celanese Corporation Q4 Earnings Release 2
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Important Information
Forward-Looking Statements
This presentation contains "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, synergies,
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, including the announced joint venture transaction. 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 presentation, including with respect to the joint venture. 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 current levels of production costs and to improve productivity by implementing technological improvements to existing plants; the
ability to identify desirable potential acquisition targets and to consummate acquisition or investment transactions consistent with the Company's strategy; 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.
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.
Presentation
This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among
customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes
the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and
the Consumer Specialties segment, which includes our cellulose derivatives business.
Non-GAAP Financial Measures
This presentation, and statements made in connection with this presentation, refer to non-GAAP financial measures. For more information on the non-GAAP financial measures
used by the Company, including the most directly comparable GAAP financial measure for each non-GAAP financial measures used, including definitions and reconciliations of
the differences between such non-GAAP financial measures and the comparable GAAP financial measures, please refer to the Non-US GAAP Financial Measures and
Supplemental Information document available on our website, www.celanese.com, under Investor Relations/Financial Information/Non-GAAP Financial Measures.
Celanese Corporation Q4 Earnings Release 3
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Q4 2017 Recent Highlights
• Demonstrated the Acetyl Chain's capabilities to address a dynamic market with multiple supply
dislocations.
• Total new project commercializations in 2017 were 2,232, a 61 percent increase year over year.
• Signed a definitive agreement to acquire Omni Plastics and its subsidiaries, a custom
compounder located in Evansville, Indiana.
• Received regulatory approvals for the acetate tow joint venture in Mexico, Turkey, Russia, and
China. Received a statement of objections from the European Commission as part of the Phase
II review process. Completed major carve-out milestone to create a new legal entity and
operating structure for the cellulose derivatives business.
• Declared the polyacetal facility at the Ibn Sina joint venture commercially operational.
Celanese’s economic interest in Ibn Sina increased from 25 percent to 32.5 percent.
• Completed a public offering of €300 million of 1.25% Senior Notes due 2025, using net
proceeds primarily for a voluntary contribution to fully fund qualified U.S. pension plans.
Celanese Corporation Q4 Earnings Release 4
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Omni Plastics is a leading
US thermoplastic compounder
Omni Plastics Footprint Brands & Product Portfolio
Custom compounder of nylon and other thermoplastics
with a broad range of applications
OmniLon™
OmniPro™
OmniCarb™
OmniTech™
45 UL1 listings
20 automotive approvals
1UL is a registered trademark of UL, LLC
Celanese Corporation Q4 Earnings Release 5
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Opportunity pipeline examples
• Fast and reliable connections are critical in
electronics for a positive user experience
• Emerging connection technologies increasingly
require materials with dimensional stability and
high heat tolerance
• Celanese Vectra® LCP offers higher stiffness
and improved thermal and mechanical
performance over traditional materials
Electronics Input/Output Connectors Laptop Keyboard Components
• Increasingly thin laptops require keyboards that
offer compact functionality and durability
• Celanese Hostaform® POM provides excellent
mechanical strength in keyboard scissor switches
with optimized reflection for keyboard illumination
• Higher material consistency helps manufacturers
reduce scrap and breakage during production
Celanese Corporation Q4 Earnings Release 6
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Factors Affecting Net Sales Changes
FY YoY
16%
14%
12%
10%
8%
6%
4%
2%
0%
Volume Price Currency Other Total
Net sales (in millions)
2017 Performance
$6,000
$4,000
$2,000
$0
30%
20%
10%
0%
FY 2016 FY 2017
23.7% 22.1%
$5,389
$6,140
Celanese Corporation 2017 Highlights
• Record adjusted earnings per share of $7.51
• Net sales growth of 14%
• Second highest ever adjusted EBIT margin
• Free cash flow of $825 million, before $316 million voluntary
pension contribution
1FY YoY represents 2017 compared to 2016
GAAP
Diluted EPS
Adjusted
EPS
FY 2017 $6.19 $7.51
FY 2016 $6.19 $6.61
Total segment income margin
1
Celanese Corporation Q4 Earnings Release 7
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FY YoY
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
Volume Price Currency Other Total
FY YoY Core income highlights
• Record net sales and adjusted EBIT in Materials Solutions driven by AEM growth that more than offset declines
in Consumer Specialties
• Highest ever segment income in AEM. Record volume growth resulted from success in base business, new
acquisitions, and higher affiliate earnings. Commercialized 2,232 new projects in 2017
• Core income margin declined due to margin dilution from AEM acquisitions and lower tow pricing
• Tow pricing and volume were lower primarily due to lower industry utilization rates outside of China
Net sales (in millions)
Materials Solutions 2017 results
2017 Performance Factors Affecting Net Sales Changes
$2,500
$2,000
$1,500
$1,000
$500
$0
40%
30%
20%
10%
0%
FY 2016 FY 2017
37.8%
31.3%
$2,373
$2,879
Total core income margin
Celanese Corporation Q4 Earnings Release 8
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Factors Affecting Net Sales Changes
FY YoY
15%
10%
5%
0%
-5%
-10%
Volume Price Currency Other Total
Acetyl Chain 2017 results
2017 Performance
Net sales (in millions) Total core income margin
$4,000
$3,000
$2,000
$1,000
$0
20%
16%
12%
8%
4%
0%
FY 2016 FY 2017
14.5%
17.1%
$3,132 $3,371
FY YoY Core income highlights
• Highest ever core income margin due to price increases, primarily acetic acid, in excess of rising raw material costs
• Flexibility of its global supply chain enabled the Acetyl Chain to respond quickly to changes in instantaneous
utilization rates, particularly in China
• Net sales growth of 8% despite constrained volumes in the second quarter from a significant planned turnaround
and disruption in the US Gulf Coast from Hurricane Harvey in the third quarter
Celanese Corporation Q4 Earnings Release 9
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Factors Affecting Net Sales Changes
QoQ Quarter YoY
25%
20%
15%
10%
5%
0%
-5%
-10%
Volume Price CurrencyOther Total
Net sales (in millions)
Q4 Performance
$1,200
$600
$0
30%
20%
10%
0%
Q4 2016 Q3 2017 Q4 2017
22.0% 22.0% 22.1%
$1,311
$1,566 $1,593
Celanese Corporation Q4 Highlights
• Highest ever adjusted EPS of $1.98 in a historically
lower quarter
• Adjusted EBIT of $352 million and adjusted EBIT
margin of 22.1%, both fourth quarter records
1QoQ represents Q4 2017 compared to Q3 2017; 2Quarter YoY represents Q4 2017 compared to Q4 2016
Adjusted EPS
GAAP
Diluted EPS
Adjusted
EPS
Q4 2017 $1.50 $1.98
Q3 2017 $1.68 $1.93
Q4 2016 $1.12 $1.52
Total segment income margin
1 2
Celanese Corporation Q4 Earnings Release 10
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YoY Core income highlights
• Net sales growth of 25% driven by the AEM opportunity
pipeline, new acquisitions, and growth in Asia
• AEM segment income was a fourth quarter record and
partially offset the decline in Consumer Specialties from tow
Net sales (in millions)
Materials Solutions Q4 results
Q4 Performance Factors Affecting Net Sales Changes
$750
$600
$450
$300
$150
$0
50%
40%
30%
20%
10%
0%
Q4 2016 Q3 2017 Q4 2017
38.5%
31.0% 28.6%
$589
$730 $735
Total core income margin
QoQ Quarter YoY
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
Volume Price Currency Other Total
QoQ Core income highlights
• Success of the AEM opportunity pipeline and growth
in Asia dampened fourth quarter seasonality
Celanese Corporation Q4 Earnings Release 11
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Acetyl Chain Q4 results
Q4 Performance Factors Affecting Net Sales Changes
QoQ Core income highlights
• Higher pricing, primarily acetic acid, more than offset
increases in raw material costs
• Ability to address supply dislocations, particularly in
China, led to record core income margin
Net sales (in millions) Total core income margin
$1,000
$800
$600
$400
$200
$0
24%
20%
16%
12%
8%
4%
0%
Q4 2016 Q3 2017 Q4 2017
11.5%
18.2%
20.0%
$749
$863 $888
YoY Core income highlights
• Higher pricing, primarily acetic acid, more than offset
increases in raw material costs, primarily methanol
• Business leveraged its global asset base and flexible
commercial model to address customer demands
QoQ Quarter YoY
25%
20%
15%
10%
5%
0%
-5%
-10%
Volume Price Currency Other Total
Celanese Corporation Q4 Earnings Release 12
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Strong Cash Flow Generation
2017
• Free cash flow of $825 million in 2017, before
$316 million voluntary pension contribution
• Net capex of $267 million in 2017, including
$140 million of growth investment
2018
• Expect 2018 free cash flow above $900 million,
exceeding the 2016-2018 target of $2.5 billion
• Expect 2018 capex to be $300-$350 million
Free Cash Flow
(in millions, except percentages)
Cash flow from operations
Free cash flow (FCF)
$1,000
$800
$600
$400
$200
$0
2015 2016 2017
$862 $893
$803
$733
$923
$825
Continue to create value through our balance sheet
12017 free cash flow before $316 million voluntary pension contribution. 2016 free cash flow before $300 million voluntary pension contribution. 2015 free cash flow before $177 million
payment related to the termination of an existing supplier agreement.
1 1 1
1
Celanese Corporation Q4 Earnings Release 13
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Dividend* Payout and Share Repurchases
Dividend Share Repurchases
$800
$700
$600
$500
$400
$300
$200
$100
$0
2012 2013 2014 2015 2016 2017
$88
$247
$394
$594
$701
$741
Returning Cash to Shareholders
Full Year 2017
Share Repurchases
• Deployed $500 million to repurchase
~5.4 million shares; reduced share count by
3.9%
• ~$1.5 billion remaining share repurchase
authorization as of December 31, 2017
Dividend
• Increased dividend per share by 28%
• Paid $241 million in dividends
*Based on dividends paid on common stock
(in millions)
$2.8 billion returned to shareholders since 2012 via
dividends and share repurchases