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Business Wire 28-Jan-2019 4:49 PM
Celanese Corporation (NYSE:CE), a global specialty materials company, today reported record GAAP diluted earnings per share of $8.95 and adjusted earnings per share of $11.00 for 2018. The Company also reported fourth quarter GAAP diluted earnings per share of $0.73 and adjusted earnings per share of $2.38. The difference between GAAP and adjusted earnings per share for the quarter and year was due to Certain Items, primarily a pension mark to market adjustment as well as expenses related to M&A and restructuring activities. Net sales for the year grew 17 percent over 2017 to $7.2 billion on price and volume expansion. Robust contributions from both Engineered Materials and the Acetyl Chain drove financial performance for the year. The Acetyl Chain elevated earnings to new levels by exercising its business model to grow volume and price year over year amid improving industry fundamentals. Engineered Materials grew through expanded project commercializations, contributions from the Nilit and Omni acquisitions, and improved joint venture performance. Celanese generated operating cash flow of $1.6 billion and free cash flow of $1.2 billion, both records, and deployed it to high return investments with the Clear Lake VAM expansion, acquisition of a Linde synthesis gas unit at Clear Lake, and acquisitions of Omni and Next Polymers. During the year, Celanese returned a record $1.1 billion in cash to shareholders through share repurchases and dividends.
Fourth Quarter and Full Year 2018 Highlights:
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
(unaudited) | ||||||||||||||||||||
(In $ millions, except per share data) | ||||||||||||||||||||
Net Sales | ||||||||||||||||||||
Engineered Materials | 622 | 580 | 2,593 | 2,213 | ||||||||||||||||
Acetate Tow | 161 | 157 | 649 | 668 | ||||||||||||||||
Acetyl Chain | 936 | 888 | 4,042 | 3,371 | ||||||||||||||||
Intersegment Eliminations | (30 | ) | (32 | ) | (129 | ) | (112 | ) | ||||||||||||
Total | 1,689 | 1,593 | 7,155 | 6,140 | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
(As Adjusted) | (As Adjusted) | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||
(In $ millions, except per share data) | ||||||||||||||||||||
Operating Profit (Loss) | ||||||||||||||||||||
Engineered Materials | 95 | 98 | 460 | 412 | ||||||||||||||||
Acetate Tow | 19 | 41 | 130 | 189 | ||||||||||||||||
Acetyl Chain | 211 | 175 | 1,024 | 509 | ||||||||||||||||
Other Activities | (66 | ) | (74 | ) | (280 | ) | (253 | ) | ||||||||||||
Total | 259 | 240 | 1,334 | 857 | ||||||||||||||||
Net earnings (loss) | 101 | 204 | 1,213 | 849 | ||||||||||||||||
Adjusted EBIT(1)(2) | ||||||||||||||||||||
Engineered Materials | 150 | 142 | 694 | 599 | ||||||||||||||||
Acetate Tow | 53 | 68 | 273 | 301 | ||||||||||||||||
Acetyl Chain | 215 | 178 | 1,022 | 575 | ||||||||||||||||
Other Activities | (25 | ) | (36 | ) | (137 | ) | (119 | ) | ||||||||||||
Total | 393 | 352 | 1,852 | 1,356 | ||||||||||||||||
Equity Earnings and Dividend Income, Other Income (Expense) | ||||||||||||||||||||
Engineered Materials | 49 | 43 | 219 | 171 | ||||||||||||||||
Acetate Tow | 25 | 26 | 116 | 107 | ||||||||||||||||
Operating EBITDA(1) | 471 | 431 | 2,168 | 1,659 | ||||||||||||||||
Diluted EPS - continuing operations | $ | 0.73 | $ | 1.50 | $ | 8.95 | $ | 6.19 | ||||||||||||
Diluted EPS - total | $ | 0.75 | $ | 1.49 | $ | 8.91 | $ | 6.09 | ||||||||||||
Adjusted EPS(1) | $ | 2.38 | $ | 1.98 | $ | 11.00 | $ | 7.51 | ||||||||||||
Net cash provided by (used in) investing activities | (98 | ) | (92 | ) | (507 | ) | (549 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (526 | ) | 145 | (1,165 | ) | (351 | ) | |||||||||||||
Net cash provided by (used in) operating activities | 363 | 58 | 1,558 | 803 | ||||||||||||||||
Free cash flow(1) | 261 | (38 | ) | 1,198 | 509 |
_____________________________ |
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(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 below. | |
Full Year Business Segment Overview
Engineered Materials
Engineered Materials' net sales grew 17 percent over 2017 to $2.6 billion. GAAP operating profit of $460 million and segment income of $694 million were driven by both price and volume expansion over 2017. Project commercializations totaling 3,274 for the year, contributions from the Nilit and Omni acquisitions, and improved affiliate performance delivered the fourth straight year of GAAP operating profit expansion and fifth straight year of segment income expansion for the segment. Engineered Materials delivered GAAP operating profit margin of 17.7 percent and segment income margin of 26.8 percent for the year. Volume growth of 9 percent over 2017 was driven by incremental project commercializations and contributions from acquisitions, and more than offset broad destocking across the value chain at the end of 2018. The segment expanded pricing 6 percent over 2017 levels on improved mix and commercial initiatives throughout the year. Affiliate earnings expanded 27 percent over 2017 to $218 million, primarily due to Celanese's higher economic interest in the Ibn Sina joint venture and higher MTBE pricing.
Acetyl Chain
The Acetyl Chain generated net sales of $4.0 billion in 2018, an increase of 20 percent over the prior year. Pricing expanded 19 percent over 2017 levels as the business flexed its global network amid sustained improvements in industry fundamentals and utilization rates. GAAP operating profit of $1.0 billion and segment income of $1.0 billion, both records, represent another step up in the earnings power of the segment. The Acetyl Chain delivered highest-ever GAAP operating profit margin of 25.3 percent, a 1,020 basis point improvement over 2017, and record segment income margin of 25.3 percent, an 820 basis point expansion over the same period. Since implementing a model to leverage its global network, the business has demonstrated multiple years of continued margin expansion by identifying highest value commercial opportunities while driving productivity. Numerous activations to optimize the broad network delivered margin expansion in 2018 that more than offset increases in raw material, freight, and energy costs.
Acetate Tow
Acetate Tow GAAP operating profit was $130 million and segment income was $273 million for the year. Volume was flat year over year. Pricing in 2018 fell 3 percent off 2017 due to lower industry capacity utilization and was partially offset by mix. Raw material costs increased in 2018 over the prior year, primarily driven by higher acetyls pricing and freight costs. Dividends from affiliates were $116 million, 8 percent higher than last year.
Recent Highlights
Fourth Quarter Business Segment Overview
Engineered Materials
Engineered Materials delivered record fourth quarter net sales of $622 million, 7 percent higher than the same quarter of 2017. The segment delivered fourth quarter GAAP operating profit of $95 million and fourth quarter segment income of $150 million as the business grew pricing and volume over the prior year. In the fourth quarter, a focused effort to extend the opportunity pipeline model grew Engineered Materials volumes over the fourth quarter of 2017, more than offsetting a reset of inventory levels across the industry value chain which began late in the quarter. The opportunity pipeline commercialized 866 projects in the quarter, 48 percent higher than the same quarter of 2017, as the business increasingly met customer innovation needs with customized technology solutions. GAAP operating profit margin was 15.3 percent and segment income margin was 24.1 percent, respectively, down 160 and 40 basis points from last year, driven by new acquisitions contributing to margin dilution and strong growth in Asia. Margins are expected to recover from fourth quarter levels as the segment returns to more normalized regional sales mix and lower raw material costs in the quarter flow through inventory.
Acetyl Chain
The Acetyl Chain's net sales for the quarter were $936 million, 5 percent higher than the fourth quarter of 2017, driven by price increases. GAAP operating profit of $211 million and segment income of $215 million, fourth quarter records, both increased by 21 percent over the same quarter last year. The global supply network and integrated product chain positioned the Acetyl Chain to expand pricing in excess of raw material increases year over year. Volume in the quarter declined 2 percent over the fourth quarter of 2017 as the segment offset most of the impact of an extended VAM turnaround at Clear Lake and customer destocking in the quarter, particularly in Asia. The Acetyl Chain delivered GAAP operating margin of 22.5 percent and segment income margin of 23.0 percent, both fourth quarter records, sustaining margin levels in a quarter with winter seasonality.
Acetate Tow
Acetate Tow recorded fourth quarter GAAP operating profit of $19 million and segment income of $53 million. Income in the quarter declined year over year due primarily to the impact of an inventory build in the fourth quarter of 2017 and higher acetyls raw material costs. Pricing declined 2 percent from the fourth quarter of 2017. Segment performance is expected to rebound sequentially in the first quarter of 2019, more consistent with the third quarter of 2018.
Cash Flow and Tax
Celanese generated operating cash flow of $1.6 billion and free cash flow of $1.2 billion for the year. Capital expenditures for the year was $337 million, approximately $70 million higher than 2017 due to a number of productivity investments and incremental expansion projects across businesses. For the year, $1.1 billion of cash was returned to shareholders, including $817 million in share repurchases and $280 million in cash dividends. The Company completed $567 million in share repurchases in the fourth quarter with $713 million remaining under the current share repurchase authorization as of December 31, 2018. The effective US GAAP tax rate was 19 percent for 2018 compared to 20 percent for 2017. The tax rate for adjusted earnings per share was 14 percent for 2018, 2 percent lower year over year, primarily due to the impact of US tax reform.
Outlook
"Underlying fundamentals and forward looking demand forecasts for our products and solutions-based businesses remain strong. The strength of our business models, additional contribution from organic investment projects underway, and planned acquisition contributions give us confidence in reaffirming our plan to earn $12 per share in 2020. Having said that, we believe the economic weakness surfacing last quarter primarily in Europe and Asia will continue through the first quarter and into the second before global business starts to recover. Assuming this slower start and expecting some fourth quarter 2019 moderation, which we commonly see, we would anticipate 2019 adjusted earnings of approximately $10.50 per share. We will be in a better position to refine this outlook during our first quarter earnings call in April, based on updated views of customer activity and economic trends," said Mark Rohr, chairman and chief executive officer.
Regarding a forward view on a US GAAP basis, 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 earnings presentation and prepared remarks related to the fourth quarter and full year results will be posted on its website at investors.celanese.com under News & Events/Presentations after market close on January 28, 2019. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our website and available at the link below. See "Non-GAAP Financial Measures" below.
Celanese Corporation is a global technology 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
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 January 28, 2019 and also available on our website at investors.celanese.com under Financial Information/Non-GAAP Financial Measures, or at this link: http://investors.celanese.com/interactive/lookandfeel/4103411/Non-GAAP.PDF.
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 | ||||||||
December 31, | ||||||||
2018 | 2017 | |||||||
(As Adjusted) | ||||||||
(In $ millions, except share and pershare data) |
||||||||
Net sales | 1,689 | 1,593 | ||||||
Cost of sales | (1,269 | ) | (1,180 | ) | ||||
Gross profit | 420 | 413 | ||||||
Selling, general and administrative expenses | (134 | ) | (143 | ) | ||||
Amortization of intangible assets | (6 | ) | (6 | ) | ||||
Research and development expenses | (18 | ) | (20 | ) | ||||
Other (charges) gains, net | — | (2 | ) | |||||
Foreign exchange gain (loss), net | (2 | ) | (1 | ) | ||||
Gain (loss) on disposition of businesses and assets, net | (1 | ) | (1 | ) | ||||
Operating profit (loss) | 259 | 240 | ||||||
Equity in net earnings (loss) of affiliates | 53 | 48 | ||||||
Non-operating pension and other postretirement employee benefit (expense) | (139 | ) | (23 | ) | ||||
Interest expense | (30 | ) | (31 | ) | ||||
Refinancing expense | (1 | ) | — | |||||
Interest income | 2 | — | ||||||
Dividend income - equity investments | 25 | 26 | ||||||
Other income (expense), net | 5 | 5 | ||||||
Earnings (loss) from continuing operations before tax | 174 | 265 | ||||||
Income tax (provision) benefit | (76 | ) | (60 | ) | ||||
Earnings (loss) from continuing operations | 98 | 205 | ||||||
Earnings (loss) from operation of discontinued operations | 4 | (2 | ) | |||||
Gain (loss) on disposition of discontinued operations | — | — | ||||||
Income tax (provision) benefit from discontinued operations | (1 | ) | 1 | |||||
Earnings (loss) from discontinued operations | 3 | (1 | ) | |||||
Net earnings (loss) | 101 | 204 | ||||||
Net (earnings) loss attributable to noncontrolling interests | (2 | ) | (1 | ) | ||||
Net earnings (loss) attributable to Celanese Corporation | 99 | 203 | ||||||
Amounts attributable to Celanese Corporation | ||||||||
Earnings (loss) from continuing operations | 96 | 204 | ||||||
Earnings (loss) from discontinued operations | 3 | (1 | ) | |||||
Net earnings (loss) | 99 | 203 | ||||||
Earnings (loss) per common share - basic | ||||||||
Continuing operations | 0.73 | 1.50 | ||||||
Discontinued operations | 0.02 | (0.01 | ) | |||||
Net earnings (loss) - basic | 0.75 | 1.49 | ||||||
Earnings (loss) per common share - diluted | ||||||||
Continuing operations | 0.73 | 1.50 | ||||||
Discontinued operations | 0.02 | (0.01 | ) | |||||
Net earnings (loss) - diluted | 0.75 | 1.49 | ||||||
Weighted average shares (in millions) | ||||||||
Basic | 131.2 | 135.8 | ||||||
Diluted | 132.1 | 136.3 |
Consolidated Statements of Operations - Unaudited |
||||||||
Year Ended December 31, | ||||||||
2018 | 2017 | |||||||
(As Adjusted) | ||||||||
(In $ millions, except share and pershare data) |
||||||||
Net sales | 7,155 | 6,140 | ||||||
Cost of sales | (5,183 | ) | (4,629 | ) | ||||
Gross profit | 1,972 | 1,511 | ||||||
Selling, general and administrative expenses | (546 | ) | (496 | ) | ||||
Amortization of intangible assets | (24 | ) | (20 | ) | ||||
Research and development expenses | (72 | ) | (73 | ) | ||||
Other (charges) gains, net | 9 | (59 | ) | |||||
Foreign exchange gain (loss), net | — | (1 | ) | |||||
Gain (loss) on disposition of businesses and assets, net | (5 | ) | (5 | ) | ||||
Operating profit (loss) | 1,334 | 857 | ||||||
Equity in net earnings (loss) of affiliates | 233 | 183 | ||||||
Non-operating pension and other postretirement employee benefit (expense) | (62 | ) | 44 | |||||
Interest expense | (125 | ) | (122 | ) | ||||
Refinancing expense | (1 | ) | — | |||||
Interest income | 6 | 2 | ||||||
Dividend income - equity investments | 117 | 108 | ||||||
Other income (expense), net | 8 | 3 | ||||||
Earnings (loss) from continuing operations before tax | 1,510 | 1,075 | ||||||
Income tax (provision) benefit | (292 | ) | (213 | ) | ||||
Earnings (loss) from continuing operations | 1,218 | 862 | ||||||
Earnings (loss) from operation of discontinued operations | (5 | ) | (16 | ) | ||||
Gain (loss) on disposition of discontinued operations | — | — | ||||||
Income tax (provision) benefit from discontinued operations | — | 3 | ||||||
Earnings (loss) from discontinued operations | (5 | ) | (13 | ) | ||||
Net earnings (loss) | 1,213 | 849 | ||||||
Net (earnings) loss attributable to noncontrolling interests | (6 | ) | (6 | ) | ||||
Net earnings (loss) attributable to Celanese Corporation | 1,207 | 843 | ||||||
Amounts attributable to Celanese Corporation | ||||||||
Earnings (loss) from continuing operations | 1,212 | 856 | ||||||
Earnings (loss) from discontinued operations | (5 | ) | (13 | ) | ||||
Net earnings (loss) | 1,207 | 843 | ||||||
Earnings (loss) per common share - basic | ||||||||
Continuing operations | 9.03 | 6.21 | ||||||
Discontinued operations | (0.04 | ) | (0.10 | ) | ||||
Net earnings (loss) - basic | 8.99 | 6.11 | ||||||
Earnings (loss) per common share - diluted | ||||||||
Continuing operations | 8.95 | 6.19 | ||||||
Discontinued operations | (0.04 | ) | (0.10 | ) | ||||
Net earnings (loss) - diluted | 8.91 | 6.09 | ||||||
Weighted average shares (in millions) | ||||||||
Basic | 134.3 | 137.9 | ||||||
Diluted | 135.4 | 138.3 |
Consolidated Balance Sheets - Unaudited |
||||||||
As of December 31, | ||||||||
2018 | 2017 | |||||||
(In $ millions) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 439 | 576 | ||||||
Trade receivables - third party and affiliates, net | 1,017 | 986 | ||||||
Non-trade receivables, net | 301 | 244 | ||||||
Inventories | 1,046 | 900 | ||||||
Marketable securities, at fair value | 31 | 32 | ||||||
Other assets | 40 | 54 | ||||||
Total current assets | 2,874 | 2,792 | ||||||
Investments in affiliates | 979 | 976 | ||||||
Property, plant and equipment, net | 3,719 | 3,762 | ||||||
Deferred income taxes | 84 | 366 | ||||||
Other assets | 290 | 338 | ||||||
Goodwill | 1,057 | 1,003 | ||||||
Intangible assets, net | 310 | 301 | ||||||
Total assets | 9,313 | 9,538 | ||||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities | ||||||||
Short-term borrowings and current installments of long-term debt - third party and affiliates | 561 | 326 | ||||||
Trade payables - third party and affiliates | 819 | 807 | ||||||
Other liabilities | 343 | 354 | ||||||
Income taxes payable | 56 | 72 | ||||||
Total current liabilities | 1,779 | 1,559 | ||||||
Long-term debt | 2,970 | 3,315 | ||||||
Deferred income taxes | 255 | 211 | ||||||
Uncertain tax positions | 158 | 156 | ||||||
Benefit obligations | 564 | 585 | ||||||
Other liabilities | 208 | 413 | ||||||
Commitments and Contingencies | ||||||||
Stockholders' Equity | ||||||||
Preferred stock | — | — | ||||||
Common stock | — | — | ||||||
Treasury stock, at cost | (2,849 | ) | (2,031 | ) | ||||
Additional paid-in capital | 233 | 175 | ||||||
Retained earnings | 5,847 | 4,920 | ||||||
Accumulated other comprehensive income (loss), net | (247 | ) | (177 | ) | ||||
Total Celanese Corporation stockholders' equity | 2,984 | 2,887 | ||||||
Noncontrolling interests | 395 | 412 | ||||||
Total equity | 3,379 | 3,299 | ||||||
Total liabilities and equity | 9,313 | 9,538 | ||||||
Non-US GAAP Financial Measures and Supplemental Information
January 28, 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/Documents 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
Supplemental Information
Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:
Recent Developments
Effective January 1, 2018, we reorganized our operating and reportable segments to align with recent structural and management reporting changes. The changes reflect the movement of our food ingredients business from the Consumer Specialties reportable segment into the Engineered Materials reportable segment. In addition, the former Consumer Specialties reportable segment was renamed the Acetate Tow segment, and the former Advanced Engineered Materials reportable segment was renamed the Engineered Materials segment. This reorganization better reflects how we manage our food ingredients' related products commercially. Engineered Materials and food ingredients are both project-based models that focus on delivering customized solutions and are led by the same senior management team.
Effective December 31, 2018, we further reorganized our operating and reportable segments to align with recent structural and management reporting changes. The change reflects the resegmentation of the former Industrial Specialties and former Acetyl Intermediates operating and reportable segments, to the Acetyl Chain operating and reportable segment. This reorganization reflects the culmination of a shift in operating strategy and organizational hierarchy, with a focus on integration, collaboration and maximization of value creation through our global optionality and integrated chain model of the underlying businesses along the Acetyl Chain segment. These changes in operating and reportable segments were applied retrospectively to prior periods through 2014.
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 | |||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | ||||||||||||||||||
(In $ millions) | |||||||||||||||||||||||||||
Net earnings (loss) attributable to Celanese Corporation | 1,207 | 99 | 401 | 344 | 363 | 843 | 203 | 226 | 231 | 183 | |||||||||||||||||
(Earnings) loss from discontinued operations | 5 | (3 | ) | 6 | — | 2 | 13 | 1 | 4 | 8 | — | ||||||||||||||||
Interest income | (6 | ) | (2 | ) | (2 | ) | — | (2 | ) | (2 | ) | — | (1 | ) | (1 | ) | — | ||||||||||
Interest expense | 125 | 30 | 30 | 32 | 33 | 122 | 31 | 32 | 30 | 29 | |||||||||||||||||
Refinancing expense | 1 | 1 | — | — | — | — | — | — | — | — | |||||||||||||||||
Income tax provision (benefit) | 292 | 76 | 54 | 97 | 65 | 213 | 60 | 57 | 40 | 56 | |||||||||||||||||
Certain Items attributable to Celanese Corporation (Table 8) |
228 | 192 | 5 | 18 | 13 | 167 | 57 | 27 | 18 | 65 | |||||||||||||||||
Adjusted EBIT | 1,852 | 393 | 494 | 491 | 474 | 1,356 | 352 | 345 | 326 | 333 | |||||||||||||||||
Depreciation and amortization expense(1) | 316 | 78 | 77 | 82 | 79 | 303 | 79 | 78 | 75 | 71 | |||||||||||||||||
Operating EBITDA | 2,168 | 471 | 571 | 573 | 553 | 1,659 | 431 | 423 | 401 | 404 |
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||
(In $ millions) | ||||||||||||||||||||
Engineered Materials | 1 | — | — | 1 | — | — | — | — | — | — | ||||||||||
Acetate Tow | 19 | 5 | 11 | 3 | — | — | — | — | — | — | ||||||||||
Acetyl Chain | 7 | 5 | 2 | — | — | 2 | — | 2 | — | — | ||||||||||
Other Activities(2) | — | — | — | — | — | — | — | — | — | — | ||||||||||
Accelerated depreciation and amortization expense | 27 | 10 | 13 | 4 | — | 2 | — | 2 | — | — | ||||||||||
Depreciation and amortization expense(1) | 316 | 78 | 77 | 82 | 79 | 303 | 79 | 78 | 75 | 71 | ||||||||||
Total depreciation and amortization expense | 343 | 88 | 90 | 86 | 79 | 305 | 79 | 80 | 75 | 71 |
______________________________
(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 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(In $ millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Profit (Loss) / Operating Margin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 460 | 17.7 | % | 95 | 15.3 | % | 124 | 19.3 | % | 114 | 17.2 | % | 127 | 19.1 | % | 412 | 18.6 | % | 98 | 16.9 | % | 105 | 18.3 | % | 105 | 19.2 | % | 104 | 20.2 | % | ||||||||||||||||||||||||||||||
Acetate Tow | 130 | 20.0 | % | 19 | 11.8 | % | 26 | 16.5 | % | 39 | 24.1 | % | 46 | 27.4 | % | 189 | 28.3 | % | 41 | 26.1 | % | 45 | 28.7 | % | 41 | 25.2 | % | 62 | 32.5 | % | ||||||||||||||||||||||||||||||
Acetyl Chain(1) | 1,024 | 25.3 | % | 211 | 22.5 | % | 287 | 28.5 | % | 273 | 26.0 | % | 253 | 24.1 | % | 509 | 15.1 | % | 175 | 19.7 | % | 147 | 17.0 | % | 135 | 16.3 | % | 52 | 6.5 | % | ||||||||||||||||||||||||||||||
Other Activities(2) | (280 | ) | (66 | ) | (63 | ) | (68 | ) | (83 | ) | (253 | ) | (74 | ) | (68 | ) | (63 | ) | (48 | ) | ||||||||||||||||||||||||||||||||||||||||
Total | 1,334 | 18.6 | % | 259 | 15.3 | % | 374 | 21.1 | % | 358 | 19.4 | % | 343 | 18.5 | % | 857 | 14.0 | % | 240 | 15.1 | % | 229 | 14.6 | % | 218 | 14.4 | % | 170 | 11.6 | % | ||||||||||||||||||||||||||||||
Less: Net Earnings (Loss) Attributable to NCI(1) | 6 | 2 | 1 | 1 | 2 | 6 | 1 | 2 | 2 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Profit (Loss) Attributable to Celanese Corporation | 1,328 | 18.6 | % | 257 | 15.2 | % | 373 | 21.1 | % | 357 | 19.4 | % | 341 | 18.4 | % | 851 | 13.9 | % | 239 | 15.0 | % | 227 | 14.5 | % | 216 | 14.3 | % | 169 | 11.5 | % | ||||||||||||||||||||||||||||||
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 460 | 17.7 | % | 95 | 15.3 | % | 124 | 19.3 | % | 114 | 17.2 | % | 127 | 19.1 | % | 412 | 18.6 | % | 98 | 16.9 | % | 105 | 18.3 | % | 105 | 19.2 | % | 104 | 20.2 | % | ||||||||||||||||||||||||||||||
Acetate Tow | 130 | 20.0 | % | 19 | 11.8 | % | 26 | 16.5 | % | 39 | 24.1 | % | 46 | 27.4 | % | 189 | 28.3 | % | 41 | 26.1 | % | 45 | 28.7 | % | 41 | 25.2 | % | 62 | 32.5 | % | ||||||||||||||||||||||||||||||
Acetyl Chain(1) | 1,018 | 25.2 | % | 209 | 22.3 | % | 286 | 28.4 | % | 272 | 25.9 | % | 251 | 23.9 | % | 503 | 14.9 | % | 174 | 19.6 | % | 145 | 16.8 | % | 133 | 16.1 | % | 51 | 6.4 | % | ||||||||||||||||||||||||||||||
Other Activities(2) | (280 | ) | (66 | ) | (63 | ) | (68 | ) | (83 | ) | (253 | ) | (74 | ) | (68 | ) | (63 | ) | (48 | ) | ||||||||||||||||||||||||||||||||||||||||
Total | 1,328 | 18.6 | % | 257 | 15.2 | % | 373 | 21.1 | % | 357 | 19.4 | % | 341 | 18.4 | % | 851 | 13.9 | % | 239 | 15.0 | % | 227 | 14.5 | % | 216 | 14.3 | % | 169 | 11.5 | % | ||||||||||||||||||||||||||||||
Equity Earnings and Dividend Income, Other Income (Expense) Attributable to Celanese Corporation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 219 |
|
(3) |
49 | 62 | 54 | 54 | 171 | 43 | 47 | 38 | 43 | ||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 116 | 25 | 26 | 33 | 32 | 107 | 26 | 24 | 28 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | 8 | 1 | 2 | 3 | 2 | 6 | 2 | 1 | 2 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 15 | 8 | 1 | — | 6 | 10 | 8 | (4 | ) | 2 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | 358 | 83 | 91 | 90 | 94 | 294 | 79 | 68 | 70 | 77 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Operating Pension and Other Post-Retirement Employee Benefit (Expense) Income Attributable to Celanese Corporation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | — | — | — | — | — | 2 | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | (62 | ) | (139 | ) | 25 | 26 | 26 | 42 | (24 | ) | 22 | 22 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||
Total | (62 | ) | (139 | ) | 25 | 26 | 26 | 44 | (23 | ) | 23 | 22 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||
Certain Items Attributable to Celanese Corporation (Table 8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 15 | 6 | 1 | 7 | 1 | 16 | 1 | 5 | 7 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 27 | 9 | 13 | 5 | — | 5 | 1 | — | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | (4 | ) | 5 | (11 | ) | 2 | — | 64 | 1 | 10 | (3 | ) | 56 | |||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 190 | 172 | 2 | 4 | 12 | 82 | 54 | 12 | 12 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 228 | 192 | 5 | 18 | 13 | 167 | 57 | 27 | 18 | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted EBIT / Adjusted EBIT Margin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 694 | 26.8 | % | 150 | 24.1 | % | 187 | 29.1 | % | 175 | 26.4 | % | 182 | 27.4 | % | 599 | 27.1 | % | 142 | 24.5 | % | 157 | 27.4 | % | 150 | 27.5 | % | 150 | 29.2 | % | ||||||||||||||||||||||||||||||
Acetate Tow | 273 | 42.1 | % | 53 | 32.9 | % | 65 | 41.1 | % | 77 | 47.5 | % | 78 | 46.4 | % | 301 | 45.1 | % | 68 | 43.3 | % | 69 | 43.9 | % | 71 | 43.6 | % | 93 | 48.7 | % | ||||||||||||||||||||||||||||||
Acetyl Chain | 1,022 | 25.3 | % | 215 | 23.0 | % | 277 | 27.5 | % | 277 | 26.4 | % | 253 | 24.1 | % | 575 | 17.1 | % | 178 | 20.0 | % | 157 | 18.2 | % | 132 | 16.0 | % | 108 | 13.6 | % | ||||||||||||||||||||||||||||||
Other Activities(2) | (137 | ) | (25 | ) | (35 | ) | (38 | ) | (39 | ) | (119 | ) | (36 | ) | (38 | ) | (27 | ) | (18 | ) | ||||||||||||||||||||||||||||||||||||||||
Total | 1,852 | 25.9 | % | 393 | 23.3 | % | 494 | 27.9 | % | 491 | 26.6 | % | 474 | 25.6 | % | 1,356 | 22.1 | % | 352 | 22.1 | % | 345 | 22.0 | % | 326 | 21.6 | % | 333 | 22.6 | % |
___________________________
(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.) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(In $ millions, except percentages) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization Expense(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 125 | 30 | 31 | 32 | 32 | 111 | 29 | 30 | 27 | 25 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetate Tow | 39 | 9 | 10 | 10 | 10 | 41 | 11 | 10 | 10 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acetyl Chain | 141 | 36 | 34 | 36 | 35 | 141 | 37 | 34 | 36 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other Activities(2) | 11 | 3 | 2 | 4 | 2 | 10 | 2 | 4 | 2 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total | 316 | 78 | 77 | 82 | 79 | 303 | 79 | 78 | 75 | 71 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Operating EBITDA / Operating EBITDA Margin | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Engineered Materials | 819 | 31.6 | % | 180 | 28.9 | % | 218 | 34.0 | % | 207 | 31.2 | % | 214 | 32.2 | % | 710 | 32.1 | % | 171 | 29.5 | % | 187 | 32.6 | % | 177 | 32.4 | % | 175 | 34.0 | % | ||||||||||||||||||||||||||||||
Acetate Tow | 312 | 48.1 | % | 62 | 38.5 | % | 75 | 47.5 | % | 87 | 53.7 | % | 88 | 52.4 | % | 342 | 51.2 | % | 79 | 50.3 | % | 79 | 50.3 | % | 81 | 49.7 | % | 103 | 53.9 | % | ||||||||||||||||||||||||||||||
Acetyl Chain | 1,163 | 28.8 | % | 251 | 26.8 | % | 311 | 30.9 | % | 313 | 29.8 | % | 288 | 27.4 | % | 716 | 21.2 | % | 215 | 24.2 | % | 191 | 22.1 | % | 168 | 20.3 | % | 142 | 17.9 | % | ||||||||||||||||||||||||||||||
Other Activities(2) | (126 | ) | (22 | ) | (33 | ) | (34 | ) | (37 | ) | (109 | ) | (34 | ) | (34 | ) | (25 | ) | (16 | ) | ||||||||||||||||||||||||||||||||||||||||
Total | 2,168 | 30.3 | % | 471 | 27.9 | % | 571 | 32.2 | % | 573 | 31.1 | % | 553 | 29.9 | % | 1,659 | 27.0 | % | 431 | 27.1 | % | 423 | 27.0 | % | 401 | 26.6 | % | 404 | 27.5 | % |
___________________________
(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 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||||||||||||||||||||||
per share | per share | 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 | 1,212 | 8.95 | 96 | 0.73 | 407 | 3.00 | 344 | 2.52 | 365 | 2.68 | 856 | 6.19 | 204 | 1.50 | 230 | 1.68 | 239 | 1.72 | 183 | 1.30 | ||||||||||||||||||||||||||||||
Income tax provision (benefit) | 292 | 76 | 54 | 97 | 65 | 213 | 60 | 57 | 40 | 56 | ||||||||||||||||||||||||||||||||||||||||
Earnings (loss) from continuing operations before tax | 1,504 | 172 | 461 | 441 | 430 | 1,069 | 264 | 287 | 279 | 239 | ||||||||||||||||||||||||||||||||||||||||
Certain Items attributable to Celanese Corporation (Table 8) |
228 | 192 | 5 | 18 | 13 | 167 | 57 | 27 | 18 | 65 | ||||||||||||||||||||||||||||||||||||||||
Refinancing and related expenses | 1 | 1 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Adjusted earnings (loss) from continuing operations before tax | 1,733 | 365 | 466 | 459 | 443 | 1,236 | 321 | 314 | 297 | 304 | ||||||||||||||||||||||||||||||||||||||||
Income tax (provision) benefit on adjusted earnings(1) | (243 | ) | (51 | ) | (65 | ) | (64 | ) | (62 | ) | (198 | ) | (51 | ) | (50 | ) | (48 | ) | (49 | ) | ||||||||||||||||||||||||||||||
Adjusted earnings (loss) from continuing operations(2) | 1,490 | 11.00 | 314 | 2.38 | 401 | 2.96 | 395 | 2.90 | 381 | 2.79 | 1,038 | 7.51 | 270 | 1.98 | 264 | 1.93 | 249 | 1.79 | 255 | 1.81 | ||||||||||||||||||||||||||||||
Diluted shares (in millions)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted average shares outstanding | 134.3 | 131.2 | 134.5 | 135.6 | 135.9 | 137.9 | 135.8 | 136.6 | 138.6 | 140.6 | ||||||||||||||||||||||||||||||||||||||||
Incremental shares attributable to equity awards | 1.1 | 0.9 | 1.0 | 0.7 | 0.5 | 0.4 | 0.5 | 0.4 | 0.4 | 0.4 | ||||||||||||||||||||||||||||||||||||||||
Total diluted shares | 135.4 | 132.1 | 135.5 | 136.3 | 136.4 | 138.3 | 136.3 | 137.0 | 139.0 | 141.0 |
______________________________
(1) | Calculated using adjusted effective tax rates (Table 3a) as follows: |
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||
(In percentages) | ||||||||||||||||||||
Adjusted effective tax rate | 14 | 14 | 14 | 14 | 14 | 16 | 16 | 16 | 16 | 16 |
(2) | Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns. |
Actual PlanAsset Returns |
ExpectedPlan AssetReturns |
||||
(In percentages) | |||||
Q4 '18 & 2018 | (3.9 | ) | 6.7 | ||
Q4 '17 & 2017 | 10.5 | 7.3 |
(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 | ||||||
Actual | ||||||
2018 | 2017 | |||||
(In percentages) | ||||||
US GAAP annual effective tax rate | 19 | 20 | ||||
Discrete quarterly recognition of GAAP items(1) | — | (11 | ) | |||
Tax impact of other charges and adjustments(2) | — | 1 | ||||
Utilization of foreign tax credits | — | 20 | ||||
Changes in valuation allowances, excluding impact of other charges and adjustments(3) | (5 | ) | (13 | ) | ||
Other(4) | — | (1 | ) | |||
Adjusted tax rate | 14 | 16 |
______________________________
Note: As part of the year-end reconciliation, we updated 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 the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes. | |
(3) | 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. | |
(4) | Tax impacts related to full-year forecasted tax opportunities and related costs. |
Table 4 | ||||||||||||||||||||||||||||||
Net Sales by Segment - Unaudited | ||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||||
Engineered Materials | 2,593 | 622 | 642 | 664 | 665 | 2,213 | 580 | 573 | 546 | 514 | ||||||||||||||||||||
Acetate Tow | 649 | 161 | 158 | 162 | 168 | 668 | 157 | 157 | 163 | 191 | ||||||||||||||||||||
Acetyl Chain | 4,042 | 936 | 1,006 | 1,049 | 1,051 | 3,371 | 888 | 863 | 826 | 794 | ||||||||||||||||||||
Other Activities(1) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Intersegment eliminations(2) | (129 | ) | (30 | ) | (35 | ) | (31 | ) | (33 | ) | (112 | ) | (32 | ) | (27 | ) | (25 | ) | (28 | ) | ||||||||||
Net sales | 7,155 | 1,689 | 1,771 | 1,844 | 1,851 | 6,140 | 1,593 | 1,566 | 1,510 | 1,471 |
___________________________
(1) | 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). | |
(2) | Includes intersegment sales primarily related to the Acetyl Chain. |
Table 4a | ||||||||||||||
Factors Affecting Segment Net Sales Sequentially - Unaudited | ||||||||||||||
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 |
(1) |
||||||
Acetate Tow | 8 | — | — | — | 8 | |||||||
Acetyl Chain | 8 | 9 | 3 | (2 | ) | 18 | ||||||
Total Company | 9 | 6 | 2 | (1 | ) | 16 |
Three Months Ended December 31, 2017 Compared to Three Months Ended September 30, 2017 |
||||||||||||
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | (8 | ) | 9 | — | — | 1 | ||||||
Acetate Tow | 2 | (2 | ) | — | — | — | ||||||
Acetyl Chain | (5 | ) | 7 | — | 1 | 3 | ||||||
Total Company | (5 | ) | 7 | — | — | 2 |
Three Months Ended September 30, 2017 Compared to Three Months Ended June 30, 2017 |
||||||||||||
Volume | Price | Currency | Other | Total | ||||||||
(In percentages) | ||||||||||||
Engineered Materials | 1 | 1 | 3 | — | 5 | |||||||
Acetate Tow | (5 | ) | 1 | — | — | (4 | ) | |||||
Acetyl Chain | 1 | — | 3 | — | 4 | |||||||
Total Company | — | 1 | 3 | — | 4 |
Three Months Ended June 30, 2017 Compared to Three Months Ended March 31, 2017 |
|||||||||||||||
Volume | Price | Currency | Other | Total | |||||||||||
(In percentages) | |||||||||||||||
Engineered Materials | 4 | — | 2 | — | 6 |
(2) |
|||||||||
Acetate Tow | (12 | ) | (3 | ) | — | — | (15 | ) | |||||||
Acetyl Chain | — | 5 | 1 | (2 | ) | 4 | |||||||||
Total Company | — | 3 | 1 | (1 | ) | 3 |
Three Months Ended March 31, 2017 Compared to Three Months Ended December 31, 2016 |
||||||||||||||
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 33 | — | (1 | ) | — | 32 |
(3) |
|||||||
Acetate Tow | 2 | (6 | ) | — | — | (4 | ) | |||||||
Acetyl Chain | 2 | 5 | (1 | ) | — | 6 | ||||||||
Total Company | 11 | 2 | (1 | ) | — | 12 |
___________________________
(1) | 2018 includes the effect of the acquisition of Omni Plastics, L.L.C. | |
(2) | 2017 includes the effect of the acquisition of the nylon compounding division of Nilit Group. | |
(3) | 2017 includes the effect of the SO.F.TER. S.p.A. acquisition. |
Table 4b | ||||||||||||||
Factors Affecting Segment Net Sales Year Over Year - Unaudited | ||||||||||||||
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 |
Three Months Ended December 31, 2017 Compared to Three Months Ended December 31, 2016 |
||||||||||||||
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 45 | — | 4 | — | 49 | |||||||||
Acetate Tow | (14 | ) | (9 | ) | 1 | 1 | (21 | ) | ||||||
Acetyl Chain | (2 | ) | 19 | 4 | (2 | ) | 19 | |||||||
Total Company | 10 | 10 | 3 | (1 | ) | 22 |
Three Months Ended September 30, 2017 Compared to Three Months Ended September 30, 2016 |
||||||||||||||
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 45 | (2 | ) | 2 | — | 45 | ||||||||
Acetate Tow | (12 | ) | (8 | ) | 1 | — | (19 | ) | ||||||
Acetyl Chain | — | 13 | 2 | (2 | ) | 13 | ||||||||
Total Company | 11 | 6 | 2 | (1 | ) | 18 |
Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016 |
|||||||||||||||
Volume | Price | Currency | Other | Total | |||||||||||
(In percentages) | |||||||||||||||
Engineered Materials | 42 | (2 | ) | (1 | ) | — | 39 | ||||||||
Acetate Tow | (13 | ) | (9 | ) | — | — | (22 | ) | |||||||
Acetyl Chain | (3 | ) | 12 | (2 | ) | (1 | ) | 6 | |||||||
Total Company | 8 | 5 | (1 | ) | — | 12 |
Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016 |
||||||||||||||
Volume | Price | Currency | Other | Total | ||||||||||
(In percentages) | ||||||||||||||
Engineered Materials | 43 | (4 | ) | (2 | ) | — | 37 | |||||||
Acetate Tow | (6 | ) | (7 | ) | — | — | (13 | ) | ||||||
Acetyl Chain | (9 | ) | 5 | (2 | ) | 1 | (5 | ) | ||||||
Total Company | 5 | 1 | (2 | ) | 1 | 5 |
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 |
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016 |
|||||||||||||
Volume | Price | Currency | Other | Total | |||||||||
(In percentages) | |||||||||||||
Engineered Materials | 44 | (2 | ) | 1 | — | 43 | |||||||
Acetate Tow | (11 | ) | (8 | ) | — | — | (19 | ) | |||||
Acetyl Chain | (4 | ) | 12 | — | — | 8 | |||||||
Total Company | 9 | 5 | — | — | 14 |
Table 5 | ||||||||||||||||||||||||||||||
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited | ||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||||
Net cash provided by (used in) investing activities | (507 | ) | (98 | ) | (78 | ) | (96 | ) | (235 | ) | (549 | ) | (92 | ) | (68 | ) | (325 | ) | (64 | ) | ||||||||||
Net cash provided by (used in) financing activities | (1,165 | ) | (526 | ) | (383 | ) | (254 | ) | (2 | ) | (351 | ) | 145 | (247 | ) | 21 | (270 | ) | ||||||||||||
Net cash provided by (used in) operating activities | 1,558 | 363 | 467 | 585 | 143 | 803 | 58 | 255 | 298 | 192 | ||||||||||||||||||||
Capital expenditures on property, plant and equipment | (337 | ) | (93 | ) | (79 | ) | (79 | ) | (86 | ) | (267 | ) | (87 | ) | (64 | ) | (54 | ) | (62 | ) | ||||||||||
Capital (distributions to) contributions from NCI | (23 | ) | (9 | ) | (6 | ) | (6 | ) | (2 | ) | (27 | ) | (9 | ) | (10 | ) | (4 | ) | (4 | ) | ||||||||||
Free cash flow(1)(2) | 1,198 | 261 | 382 | 500 | 55 | 509 | (38 | ) | 181 | 240 | 126 | |||||||||||||||||||
Net sales | 7,155 | 1,689 | 1,771 | 1,844 | 1,851 | 6,140 | 1,593 | 1,566 | 1,510 | 1,471 | ||||||||||||||||||||
Free cash flow as % of Net sales | 16.7 | % | 15.5 | % | 21.6 | % | 27.1 | % | 3.0 | % | 8.3 | % | (2.4 | )% | 11.6 | % | 15.9 | % | 8.6 | % |
______________________________
(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 capital lease payments of $63 million and $27 million for the years ending December 31, 2018 and 2017, respectively. |
Table 6 | ||||||||||||||||||||
Cash Dividends Received - Unaudited | ||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||
(In $ millions) | ||||||||||||||||||||
Dividends from equity method investments | 221 | 62 | 44 | 39 | 76 | 131 | 17 | 5 | 59 | 50 | ||||||||||
Dividends from equity investments without readily determinable fair values | 117 | 25 | 26 | 34 | 32 | 108 | 26 | 24 | 29 | 29 | ||||||||||
Total | 338 | 87 | 70 | 73 | 108 | 239 | 43 | 29 | 88 | 79 |
Table 7 | ||||||||||||||||||||||||||||||
Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited | ||||||||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | |||||||||||||||||||||
(In $ millions) | ||||||||||||||||||||||||||||||
Short-term borrowings and current installments of long-term debt - third party and affiliates | 561 | 561 | 229 | 366 | 425 | 326 | 326 | 435 | 384 | 107 | ||||||||||||||||||||
Long-term debt, net of unamortized deferred financing costs | 2,970 | 2,970 | 3,196 | 3,228 | 3,343 | 3,315 | 3,315 | 2,954 | 2,931 | 2,851 | ||||||||||||||||||||
Total debt | 3,531 | 3,531 | 3,425 | 3,594 | 3,768 | 3,641 | 3,641 | 3,389 | 3,315 | 2,958 | ||||||||||||||||||||
Cash and cash equivalents | (439 | ) | (439 | ) | (703 | ) | (708 | ) | (490 | ) | (576 | ) | (576 | ) | (461 | ) | (511 | ) | (501 | ) | ||||||||||
Net debt | 3,092 | 3,092 | 2,722 | 2,886 | 3,278 | 3,065 | 3,065 | 2,928 | 2,804 | 2,457 |
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: |
||||||||||||||||||||||||
2018 | Q4 '18 | Q3 '18 | Q2 '18 | Q1 '18 | 2017 | Q4 '17 | Q3 '17 | Q2 '17 | Q1 '17 | Income Statement Classification | ||||||||||||||
(In $ millions) | ||||||||||||||||||||||||
Plant/office closures | 19 | 16 | — | 3 | — | 58 | 2 | 2 | (3 | ) | 57 |
Cost of sales / SG&A / R&D / Other charges (gains), net |
||||||||||||
Mergers and acquisitions | 33 | 6 | 3 | 11 | 13 | 35 | 9 | 10 | 7 | 9 | Cost of sales / SG&A / Other income (expense), net | |||||||||||||
Impact from natural disasters(1) | — | — | — | — | — | 11 | — | 11 | — | — | Cost of sales | |||||||||||||
InfraServ ownership change | — | — | — | — | — | 8 | — | — | 8 | — | Other charges (gains), net / Equity in net earnings (loss) of affiliates | |||||||||||||
Actuarial (gain) loss on pension and postretirement plans | 166 | 166 | — | — | — | 46 | 46 | — | — | — | Cost of sales / SG&A / Non-operating pension and other postretirement employee benefit (expense) income | |||||||||||||
Restructuring | 9 | 4 | 2 | 3 | — | 9 | — | 4 | 3 | 2 | Cost of sales / SG&A / Other charges (gains), net / Non-operating pension and other postretirement employee benefit (expense) income | |||||||||||||
Other | 1 | — | — | 1 | — | — | — | — | 3 | (3 | ) | (Gain) loss on disposition, net / Equity in net earnings (loss) of affiliates | ||||||||||||
Certain Items attributable to Celanese Corporation | 228 | 192 | 5 | 18 | 13 | 167 | 57 | 27 | 18 | 65 |
______________________________
(1) | Primarily associated with Hurricane Harvey. |
Table 9 | ||||||||||||||
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited | ||||||||||||||
2018 | 2017 | |||||||||||||
(In $ millions,except percentages) |
(In $ millions,except percentages) |
|||||||||||||
Net earnings (loss) attributable to Celanese Corporation | 1,207 | 843 | ||||||||||||
Adjusted EBIT (Table 1) |
1,852 | 1,356 | ||||||||||||
Adjusted effective tax rate (Table 3a) |
14 | % | 16 | % | ||||||||||
Adjusted EBIT tax effected | 1,593 | 1,139 | ||||||||||||
2018 | 2017 | Average | 2017 | 2016 | Average | |||||||||
(In $ millions, except percentages) | ||||||||||||||
Short-term borrowings and current installments of long-term debt - third parties and affiliates | 561 | 326 | 444 | 326 | 118 | 222 | ||||||||
Long-term debt, net of unamortized deferred financing costs | 2,970 | 3,315 | 3,143 | 3,315 | 2,890 | 3,103 | ||||||||
Celanese Corporation stockholders' equity | 2,984 | 2,887 | 2,936 | 2,887 | 2,588 | 2,738 | ||||||||
Invested capital | 6,523 | 6,063 | ||||||||||||
Return on invested capital (adjusted) | 24.4 | % | 18.8 | % | ||||||||||
Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital | 18.5 | % | 13.9 | % |
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