Celanese Corporation Reports Second Quarter 2019 Earnings; Reaffirms 2019 Full Year

Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, reported second quarter GAAP diluted earnings per share of $1.67 and adjusted earnings per share of $2.38 on net sales of $1.6 billion. Celanese delivered solid performance, amid a backdrop of weak demand and accelerated destocking, by exercising its differentiated business models in the Acetyl Chain and Engineered Materials, and demonstrating a stable Acetate Tow earnings profile. In the second quarter, the Company generated operating cash flow of $424 million and free cash flow of $356 million, and returned $378 million to shareholders through $300 million in share repurchases and $78 million in dividends. With an expectation for improved demand fundamentals as the year progresses, the Company reaffirmed its full year 2019 guidance for adjusted EPS.

Second Quarter 2019 Financial Highlights:

Three Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

(unaudited)

(In $ millions)

Operating Profit (Loss)

Engineered Materials

103

144

114

Acetate Tow

(44

)

40

39

Acetyl Chain

188

202

273

Other Activities

(61

)

(66

)

(68

)

Total

186

320

358

 

Three Months Ended

June 30,
2019

March 31,
2019

June 30,
2018

(unaudited)

(In $ millions, except per share data)

Net Earnings (Loss)

210

338

345

Adjusted EBIT(1)(2)

Engineered Materials

148

183

175

Acetate Tow

71

72

77

Acetyl Chain

189

203

277

Other Activities

(32

)

(37

)

(38

)

Total

376

421

491

Equity Earnings and Dividend Income, Other Income (Expense)

Engineered Materials

36

46

54

Acetate Tow

29

32

33

Operating EBITDA(1)

458

502

573

Diluted EPS - continuing operations

$

1.67

$

2.64

$

2.52

Diluted EPS - total

$

1.66

$

2.63

$

2.52

Adjusted EPS(1)

$

2.38

$

2.62

$

2.90

Net cash provided by (used in) investing activities

(66

)

(177

)

(96

)

Net cash provided by (used in) financing activities

(307

)

(130

)

(254

)

Net cash provided by (used in) operating activities

424

307

585

Free cash flow(1)

356

224

500

______________________________

(1)

See "Non-US GAAP Financial Measures" below.

(2)

The Company's discussion of adjusted earnings includes use of the term "segment income". This non-GAAP term is defined below and reconciled in our Non-US GAAP Financial Measures and Supplemental Information document referenced below.

Second Quarter 2019 Highlights:

  • Announced the shutdown of acetate flake production at the Ocotlán, Jalisco, Mexico manufacturing facility by October 31, 2019, ceasing all manufacturing operations at the facility and further consolidating the global acetate manufacturing operations.
  • Completed the addition of a new GUR® ultra-high molecular weight polyethylene (UHMW-PE) production line at the Nanjing, China manufacturing facility to support significant growth in the electric vehicle market. The new production line adds approximately 15 kt per year of additional product capacity.
  • Delivered 1,177 Engineered Materials project wins in the second quarter of 2019 and on track to commercialize more than 4,000 projects for the year.
  • Completed a registered offering of $500 million of U.S. dollar-denominated senior notes due in 2024. The Company simultaneously entered into a cross-currency swap to effectively convert to a euro-denominated borrowing with a net borrowing rate of 1.03 percent.
  • Completed $1.2 billion in share repurchases over the last 12 months or 9 percent of outstanding shares.

Second Quarter 2019 Business Segment Overview

Engineered Materials (EM)

Engineered Materials recorded net sales of $593 million in the second quarter. The volume impact on net sales was a decline of 7 percent sequentially, comprised of a 4 percent decline in volumetric polymer sales primarily due to demand weakness and industry destocking, as well as a 3 percent sequential mix impact which includes the timing of medical sales. The industry saw broad price declines in Asia and competitive pricing pressure globally in nylon, but the Company offset much of this pressure, holding the sequential price decline to 3 percent. GAAP operating profit was $103 million and segment income was $148 million as the business worked to overcome demand softness across multiple end markets, continued destocking, and weaker affiliate performance. The business continued to execute its customer needs based project model to commercialize 1,177 projects, delivering performance in excess of weaker underlying end markets including automotive and electronics.

Acetyl Chain

The Acetyl Chain recorded second quarter net sales of $865 million, as sequential volume growth of 2 percent largely offset a decline in industry acetic acid pricing. GAAP operating profit was $188 million and segment income was $189 million, as the Acetyl Chain global system pivoted downstream to VAM and emulsions to generate incremental value. GAAP operating and segment income margin performance of 22 percent confirms the ability of the Acetyl Chain to generate earnings performance that is differentiated versus the market environment. The Acetyl Chain delivered sequential volume growth, despite major VAM turnarounds at Bay City and Nanjing, through rigorous inventory planning and product sourcing. High-return investments are underway, which will generate significant productivity gains and further expand the efficiency and operating flexibility of the global acetyls network.

Acetate Tow

Acetate Tow reported a GAAP operating loss of $44 million, including an impairment charge of $83 million relating to the Ocotlán shutdown, and segment income of $71 million in the second quarter. Price and volume in the quarter were stable year over year and sequentially, reflecting strong execution and steadier industry dynamics. Dividends from affiliates were $29 million in the second quarter, down slightly from the first quarter due to the impact of timing and currency.

Cash Flow and Tax

The Company delivered operating cash flow of $424 million and free cash flow of $356 million in the quarter, driven by improved conversion of earnings to cash through working capital management. Capital expenditures in the quarter were $65 million, with roughly half of non-maintenance spend through the first half of the year devoted to cost reduction projects. The Company is on pace for capital expenditures approaching $400 million for the year. A total of $378 million in cash was returned to shareholders, including $300 million in share repurchases and $78 million in dividends. The Company repurchased 2 percent of total shares outstanding in the quarter and 9 percent over the last twelve months. The US GAAP effective tax rate was 12 percent in the second quarter compared to 22 percent in the same quarter of last year, primarily due to 2019 reductions in a valuation allowance on future foreign tax credit usage. The adjusted tax rate was 14 percent in the quarter, unchanged year over year.

Outlook

"Our teams successfully executed on the unique business models we have in place to again deliver solid earnings performance amid a very challenging economic backdrop," said Lori Ryerkerk, chief executive officer. "The Acetyl Chain flexed its global network to drive incremental value downstream and deliver robust foundational earnings despite weak industry fundamentals. Engineered Materials worked the project pipeline model to deliver results in excess of underlying end market demand conditions. Acetate Tow again displayed a stabilized earnings profile, generating adjusted earnings consistent with last quarter. Looking forward, we continue to see a path to 2019 adjusted earnings of approximately $10.50 per share based on an expectation that underlying fundamentals will improve as we progress through the end of the year. We continue to strengthen our businesses by executing on our continuous productivity programs and strategically investing in high-return organic projects."

We are 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 second quarter results will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library after market close on July 22, 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.
  • Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT margin by business segment may also be referred to by management as segment income margin.
  • 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 July 22, 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

June 30,
2019

March 31,
2019

June 30,
2018

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

Net sales

1,592

1,687

1,844

Cost of sales

(1,169

)

(1,234

)

(1,323

)

Gross profit

423

453

521

Selling, general and administrative expenses

(118

)

(120

)

(136

)

Amortization of intangible assets

(6

)

(6

)

(7

)

Research and development expenses

(17

)

(16

)

(18

)

Other (charges) gains, net

(98

)

4

(3

)

Foreign exchange gain (loss), net

1

5

3

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

1

(2

)

Operating profit (loss)

186

320

358

Equity in net earnings (loss) of affiliates

39

50

56

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

17

17

26

Interest expense

(29

)

(31

)

(32

)

Refinancing expense

(4

)

Interest income

2

1

Dividend income - equity investments

30

32

34

Other income (expense), net

(2

)

(4

)

Earnings (loss) from continuing operations before tax

239

385

442

Income tax (provision) benefit

(28

)

(46

)

(97

)

Earnings (loss) from continuing operations

211

339

345

Earnings (loss) from operation of discontinued operations

(2

)

(1

)

Income tax (provision) benefit from discontinued operations

1

Earnings (loss) from discontinued operations

(1

)

(1

)

Net earnings (loss)

210

338

345

Net (earnings) loss attributable to noncontrolling interests

(1

)

(1

)

(1

)

Net earnings (loss) attributable to Celanese Corporation

209

337

344

Amounts attributable to Celanese Corporation

Earnings (loss) from continuing operations

210

338

344

Earnings (loss) from discontinued operations

(1

)

(1

)

Net earnings (loss)

209

337

344

Earnings (loss) per common share - basic

Continuing operations

1.68

2.65

2.54

Discontinued operations

(0.01

)

(0.01

)

Net earnings (loss) - basic

1.67

2.64

2.54

Earnings (loss) per common share - diluted

Continuing operations

1.67

2.64

2.52

Discontinued operations

(0.01

)

(0.01

)

Net earnings (loss) - diluted

1.66

2.63

2.52

Weighted average shares (in millions)

Basic

125.3

127.5

135.6

Diluted

125.8

128.2

136.3

Consolidated Balance Sheets - Unaudited

As of
June 30,
2019

As of
December 31,
2018

(In $ millions)

ASSETS

Current Assets

Cash and cash equivalents

491

439

Trade receivables - third party and affiliates, net

971

1,017

Non-trade receivables, net

332

301

Inventories

1,011

1,046

Marketable securities, at fair value

27

31

Other assets

44

40

Total current assets

2,876

2,874

Investments in affiliates

959

979

Property, plant and equipment, net

3,642

3,719

Operating lease right-of-use assets

209

Deferred income taxes

90

84

Other assets

320

290

Goodwill

1,083

1,057

Intangible assets, net

327

310

Total assets

9,506

9,313

LIABILITIES AND EQUITY

Current Liabilities

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

319

561

Trade payables - third party and affiliates

764

819

Other liabilities

302

343

Income taxes payable

23

56

Total current liabilities

1,408

1,779

Long-term debt, net of unamortized deferred financing costs

3,444

2,970

Deferred income taxes

265

255

Uncertain tax positions

171

158

Benefit obligations

545

564

Operating lease liabilities

192

Other liabilities

227

208

Commitments and Contingencies

Stockholders' Equity

Treasury stock, at cost

(3,347

)

(2,849

)

Additional paid-in capital

233

233

Retained earnings

6,245

5,847

Accumulated other comprehensive income (loss), net

(267

)

(247

)

Total Celanese Corporation stockholders' equity

2,864

2,984

Noncontrolling interests

390

395

Total equity

3,254

3,379

Total liabilities and equity

9,506

9,313

Non-US GAAP Financial Measures and Supplemental Information

July 22, 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.
  • Adjusted EBIT by business segment may also be referred to by management as segment income. Adjusted EBIT margin by business segment may also be referred to by management as segment income margin.
  • 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

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

209

337

1,207

99

401

344

363

(Earnings) loss from discontinued operations

1

1

5

(3

)

6

2

Interest income

(2

)

(1

)

(6

)

(2

)

(2

)

(2

)

Interest expense

29

31

125

30

30

32

33

Refinancing expense

4

1

1

Income tax provision (benefit)

28

46

292

76

54

97

65

Certain Items attributable to Celanese Corporation (Table 8)

107

7

228

192

5

18

13

Adjusted EBIT

376

421

1,852

393

494

491

474

Depreciation and amortization expense(1)

82

81

316

78

77

82

79

Operating EBITDA

458

502

2,168

471

571

573

553

 

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions)

Engineered Materials

1

1

1

Acetate Tow

2

19

5

11

3

Acetyl Chain

1

7

5

2

Other Activities(2)

Accelerated depreciation and amortization expense

2

2

27

10

13

4

Depreciation and amortization expense(1)

82

81

316

78

77

82

79

Total depreciation and amortization expense

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

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

Engineered Materials

103

17.4

%

144

21.7

%

460

17.7

%

95

15.3

%

124

19.3

%

114

17.2

%

127

19.1

%

Acetate Tow

(44

)

(26.8

)%

40

24.1

%

130

20.0

%

19

11.8

%

26

16.5

%

39

24.1

%

46

27.4

%

Acetyl Chain(1)

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)

(61

)

(66

)

(280

)

(66

)

(63

)

(68

)

(83

)

Total

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)

1

1

6

2

1

1

2

Operating Profit (Loss) Attributable to Celanese Corporation

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

103

17.4

%

144

21.7

%

460

17.7

%

95

15.3

%

124

19.3

%

114

17.2

%

127

19.1

%

Acetate Tow

(44

)

(26.8

)%

40

24.1

%

130

20.0

%

19

11.8

%

26

16.5

%

39

24.1

%

46

27.4

%

Acetyl Chain(1)

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)

(61

)

(66

)

(280

)

(66

)

(63

)

(68

)

(83

)

Total

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

36

46

219

(3)

49

62

54

54

Acetate Tow

29

32

116

25

26

33

32

Acetyl Chain

1

1

8

1

2

3

2

Other Activities(2)

1

(1

)

15

8

1

6

Total

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

(62

)

(139

)

25

26

26

Total

17

17

(62

)

(139

)

25

26

26

Certain Items Attributable to Celanese Corporation (Table 8)

Engineered Materials

9

(7

)

15

6

1

7

1

Acetate Tow

86

27

9

13

5

Acetyl Chain

1

1

(4

)

5

(11

)

2

Other Activities(2)

11

13

190

172

2

4

12

Total

107

7

228

192

5

18

13

Adjusted EBIT / Adjusted EBIT Margin

Engineered Materials

148

25.0

%

183

27.6

%

694

26.8

%

150

24.1

%

187

29.1

%

175

26.4

%

182

27.4

%

Acetate Tow

71

43.3

%

72

43.4

%

273

42.1

%

53

32.9

%

65

41.1

%

77

47.5

%

78

46.4

%

Acetyl Chain

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)

(32

)

(37

)

(137

)

(25

)

(35

)

(38

)

(39

)

Total

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.)

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

Engineered Materials

31

31

125

30

31

32

32

Acetate Tow

9

10

39

9

10

10

10

Acetyl Chain

38

37

141

36

34

36

35

Other Activities(2)

4

3

11

3

2

4

2

Total

82

81

316

78

77

82

79

Operating EBITDA / Operating EBITDA Margin

Engineered Materials

179

30.2

%

214

32.3

%

819

31.6

%

180

28.9

%

218

34.0

%

207

31.2

%

214

32.2

%

Acetate Tow

80

48.8

%

82

49.4

%

312

48.1

%

62

38.5

%

75

47.5

%

87

53.7

%

88

52.4

%

Acetyl Chain

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)

(28

)

(34

)

(126

)

(22

)

(33

)

(34

)

(37

)

Total

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

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

(In $ millions, except per share data)

Earnings (loss) from continuing operations attributable to Celanese Corporation

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)

28

46

292

76

54

97

65

Earnings (loss) from continuing operations before tax

238

384

1,504

172

461

441

430

Certain Items attributable to Celanese Corporation (Table 8)

107

7

228

192

5

18

13

Refinancing and related expenses

4

1

1

Adjusted earnings (loss) from continuing operations before tax

349

391

1,733

365

466

459

443

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

(49

)

(55

)

(243

)

(51

)

(65

)

(64

)

(62

)

Adjusted earnings (loss) from continuing operations(2)

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

125.3

127.5

134.3

131.2

134.5

135.6

135.9

Incremental shares attributable to equity awards

0.5

0.7

1.1

0.9

1.0

0.7

0.5

Total diluted shares

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:

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In percentages)

Adjusted effective tax rate

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

13

19

Discrete quarterly recognition of GAAP items(1)

1

Utilization of foreign tax credits

(2

)

Changes in valuation allowances, excluding impact of other charges and adjustments(2)

1

(5

)

Other(3)

1

Adjusted tax rate

14

14

______________________________

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

(1)

Such as changes in tax laws (including US tax reform), deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.

(2)

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.

(3)

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

Table 4

Net Sales by Segment - Unaudited

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions)

Engineered Materials

593

663

2,593

622

642

664

665

Acetate Tow

164

166

649

161

158

162

168

Acetyl Chain

865

889

4,042

936

1,006

1,049

1,051

Intersegment eliminations(1)

(30

)

(31

)

(129

)

(30

)

(35

)

(31

)

(33

)

Net sales

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 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 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

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

(66

)

(177

)

(507

)

(98

)

(78

)

(96

)

(235

)

Net cash provided by (used in) financing activities

(307

)

(130

)

(1,165

)

(526

)

(383

)

(254

)

(2

)

Net cash provided by (used in) operating activities

424

307

1,558

363

467

585

143

Capital expenditures on property, plant and equipment

(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)

356

224

1,198

261

382

500

55

Net sales

1,592

1,687

7,155

1,689

1,771

1,844

1,851

Free cash flow as % of Net sales

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

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

(In $ millions)

Dividends from equity method investments

41

70

221

62

44

39

76

Dividends from equity investments without readily determinable fair values

30

32

117

25

26

34

32

Total

71

102

338

87

70

73

108

Table 7

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

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

319

743

561

561

229

366

425

Long-term debt, net of unamortized deferred financing costs

3,444

2,933

2,970

2,970

3,196

3,228

3,343

Total debt

3,763

3,676

3,531

3,531

3,425

3,594

3,768

Cash and cash equivalents

(491

)

(441

)

(439

)

(439

)

(703

)

(708

)

(490

)

Net debt

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:

Q2 '19

Q1 '19

2018

Q4 '18

Q3 '18

Q2 '18

Q1 '18

Income Statement Classification

(In $ millions)

Plant/office closures

2

3

19

16

3

Cost of sales / Other charges (gains), net

Asset impairments

83

Other charges (gains), net

Mergers and acquisitions

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

15

(1

)

9

4

2

3

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

Other

3

2

1

1

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

Certain Items attributable to Celanese Corporation

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

%

Contacts:

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

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