Celanese Corporation Reports Third Quarter 2023 Earnings

DALLAS, November 06, 2023--(BUSINESS WIRE)--Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today reported third quarter 2023 GAAP diluted earnings per share of $8.70 and adjusted earnings per share of $2.50. The Company generated net sales of $2.7 billion in the quarter, a decrease of 3 percent from the prior quarter, reflecting a sequential decrease in pricing of 3 percent partially offset by a sequential increase in volume of 1 percent. Celanese reported third quarter consolidated operating profit of $842 million, adjusted EBIT of $451 million, and operating EBITDA of $624 million, at margins of 31, 17, and 23 percent, respectively. The Company has delivered sequential increases in these profitability metrics across each of the last three quarters.

The difference between GAAP diluted earnings per share and adjusted earnings per share in the third quarter was primarily due to Certain Items totaling $438 million, including the gain from the formation of the Nutrinova joint venture (JV) and M&A-related costs, as well as a recorded income tax benefit of $236 million, primarily due to internal relocations of intellectual property to align with acquired operations.

Celanese took actions to reduce costs, align production and inventory levels with demand, and maximize cash generation in response to unfavorable demand and competitive dynamics. As a result, the Company:

  • Reduced inventory balances by $177 million in the third quarter with inventory reductions across Engineered Materials and the Acetyl Chain of 7 percent and 6 percent, respectively;

  • Generated third quarter operating cash flow of $403 million and free cash flow of $268 million; and

  • Reduced net debt by $758 million in the third quarter, including a $697 million sequential decrease in debt and a $61 million sequential increase in cash.

"Our third quarter performance is a reflection of our commitment to take the necessary actions to support our earnings growth and deleveraging plan in what has been a persistently challenging backdrop this year," said Lori Ryerkerk, chair and chief executive officer. "We continued to lift the earnings power of Celanese and significantly strengthened our balance sheet position in the third quarter. Across the first three quarters of 2023 we have reduced our net debt by $829 million and remain well on path to meaningfully exceed the full year objective to reduce net debt by $1 billion in 2023."

Third Quarter 2023 Financial Highlights:

Three Months Ended

September 30,
2023

June 30,
2023

September 30,
2022

(unaudited)

(In $ millions, except per share data)

Net Sales

Engineered Materials

1,528

1,585

929

Acetyl Chain

1,220

1,233

1,397

Intersegment Eliminations

(25

)

(23

)

(25

)

Total

2,723

2,795

2,301

Operating Profit (Loss)

Engineered Materials

691

158

114

Acetyl Chain

272

295

312

Other Activities

(121

)

(118

)

(118

)

Total

842

335

308

Net Earnings (Loss)

949

221

193

Adjusted EBIT(1)

Engineered Materials

229

205

206

Acetyl Chain

310

332

349

Other Activities

(88

)

(93

)

(45

)

Total

451

444

510

Equity Earnings and Dividend Income, Other Income (Expense)

Engineered Materials

12

20

70

Acetyl Chain

33

32

34

Operating EBITDA(1)

624

616

607

Diluted EPS - continuing operations

$

8.70

$

2.00

$

1.76

Diluted EPS - total

$

8.69

$

2.01

$

1.75

Adjusted EPS(1)

$

2.50

$

2.17

$

3.94

Net cash provided by (used in) investing activities

375

(163

)

(143

)

Net cash provided by (used in) financing activities

(700

)

(447

)

8,600

Net cash provided by (used in) operating activities

403

762

467

Free cash flow(1)

268

611

325

____________________________

(1)

See "Non-US GAAP Financial Measures" below.

Recent Highlights:

  • Announced a series of transactions to extend the Company's debt maturity profile and lower the total effective net borrowing rate to the Company. The total value of the combined 2023, 2024, and 2025 debt maturities was significantly reduced, effectively eliminating the need to refinance any debt over the next several years.

  • Completed the formation of Nutrinova, a Food Ingredients JV with Mitsui & Co., Ltd.,. Celanese contributed the assets, technology, and employees of its Food Ingredients business of which Mitsui acquired a 70 percent stake at a purchase price of $503 million, including closing adjustments.

  • Announced the planned closure of the Company's nylon 66 (PA66) and high-performance nylon (HPN) polymerization units in Uentrop, Germany. Polymerization costs at Uentrop are the highest in the Celanese global nylon network due to energy and raw material costs in the region. The Company plans to cease PA66 and HPN polymerization at Uentrop by January 1, 2024 and February 1, 2024, respectively.

  • Ceased production at Engineered Materials production facilities in Campo Bom, Brazil; Berazategui, Argentina; and Wehr, Germany in September and October.

Third Quarter 2023 Business Segment Overview

Acetyl Chain

The Acetyl Chain delivered third quarter net sales of $1.2 billion, a 1 percent decrease from the prior quarter. Third quarter volume increased by 3 percent sequentially, and pricing decreased by 3 percent sequentially and 18 percent year over year as a result of lower global industry utilization, particularly in the Western Hemisphere. The business navigated weakened pricing conditions by utilizing its commercial and supply chain optionality. Amid disruptions in acetic acid industry supply in China, the business pivoted to secure 48 percent more sequential acetic acid volume in China and captured a disproportionate share of pricing strength at the end of the third quarter. The business continued to flex its production network to align with demand, including idling the Frankfurt VAM facility for the duration of the quarter, to deliver further inventory reductions. As a result of these actions, the Acetyl Chain delivered third quarter operating profit of $272 million, adjusted EBIT of $310 million, and operating EBITDA of $365 million at margins of 22, 25, and 30 percent, respectively. The Acetyl Chain limited the sequential decline in each of these profit metrics to approximately $20 million, despite a series of sequential headwinds including margin compression in Europe, a spike in U.S. Gulf Coast electricity costs, and an unfavorable earnings impact related to inventory. In a global demand environment that remains challenged, the Acetyl Chain has demonstrated the stability and resilience of its foundational earnings across each quarter of 2023.

Engineered Materials

Engineered Materials reported third quarter net sales of $1.5 billion, a sequential decrease of 4 percent. Sequential volume declined by 1 percent as the impact of poor demand conditions across most end-markets was partially offset by sequential volume growth in automotive and medical. Third quarter pricing decreased by 3 percent sequentially as a result of challenging competitive dynamics across the year due to poor demand and raw material deflation. The business offset the impact of pricing and volume decreases by reducing costs, aligning production and inventory levels to demand, and pivoting to end-markets with relative demand strength. Engineered Materials reduced inventory by approximately $140 million across the third quarter and has delivered inventory reductions across the first three quarters of 2023 approaching $400 million. Engineered Materials delivered third quarter operating profit of $691 million, adjusted EBIT of $229 million, and operating EBITDA of $340 million at margins of 45, 15, and 22 percent, respectively. Sequential increases in these earnings metrics was supported by increased earnings contributions from Mobility & Materials (M&M) driven by volume growth and incremental synergies. Affiliate earnings decreased by $10 million sequentially, primarily driven by M&M-related affiliates.

Cash Flow and Tax

Celanese reported third quarter operating cash flow of $403 million and free cash flow of $268 million which included cash capital expenditures of $131 million. Celanese returned $76 million in cash to shareholders via dividends in the quarter.

The effective income tax rate was a benefit of 33 percent for the third quarter compared to an expense of 40 percent for the same quarter in 2022. The lower effective rate was primarily due to the relocation of certain intangible assets to align with the acquired M&M foreign operations, differences in the tax and U.S. GAAP gain from the formation of the Nutrinova JV, decreased earnings in high taxed jurisdictions related to current demand conditions, and a decrease in valuation allowances on U.S. foreign tax credit carryforwards due to revised forecasts of foreign sourced income and expenses during the carryforward period. The effective tax rate for 2023 adjusted earnings was revised to 9 percent based on the expected jurisdictional earnings mix for the full year and consideration of other non-recurring U.S. GAAP items.

Outlook

"Our focus remains on sustainably lifting the earnings power of Celanese by taking decisive actions to control what we can in an operating environment that remains volatile and uncertain," said Lori Ryerkerk. "Through the organizational, production footprint, and commercial actions we take, we are supporting near-term performance and laying the groundwork for amplified earnings growth when demand returns. We are hard at work to deliver sequential growth in the earnings contributions from our businesses in the fourth quarter, despite anticipated cold weather seasonality, and to position ourselves to enter 2024 with additional momentum."

Reflective of controllable actions, improvement in destocking conditions, and typical cold weather seasonality, the Company anticipates fourth quarter adjusted earnings per share of $2.10 to $2.50, inclusive of approximately $0.30 per share of M&M transaction amortization. Consequently, Celanese anticipates full year adjusted earnings per share at the lower-end of the previous $9.00 to $10.00 range, inclusive of approximately $1.20 per share of M&M transaction amortization.

Reconciliations of forecasted non-GAAP measures such as adjusted earnings per share, adjusted EBIT or free cash flow to the equivalent U.S. GAAP measures (diluted earnings per share, net earnings (loss) attributable to Celanese Corporation and net cash provided by (used in) operations, respectively), are not available without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, and other items is not practical. For more information, see "Non-GAAP Financial Measures" below.

The Company's prepared remarks related to the third quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library on November 6, 2023. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our investor relations website under Financial Information/Non-GAAP Financial Measures. See also "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 13,000 employees worldwide and had 2022 net sales of $9.7 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, cash flow, financial performance, synergies, 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; volatility or changes in the price and availability of raw materials and energy, 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 length and depth of product and industry business cycles, particularly in the automotive, electrical, mobility, textiles, medical, electronics and construction industries; the ability to pass increases in raw material prices, logistics costs and other costs on to customers or otherwise improve margins through price increases; the accuracy or inaccuracy of our beliefs or assumptions regarding anticipated benefits of the acquisition (the "M&M Acquisition") by us of the majority of the Mobility & Materials business (the "M&M Business") of DuPont de Nemours, Inc.; the possibility that we will not be able to realize all of the anticipated improvements in the M&M Business's financial performance — including optimizing pricing, currency mix and inventory — or realize all of the anticipated benefits of the M&M Acquisition, including synergies and growth opportunities, within the anticipated timeframe, or at all, whether as a result of difficulties arising from the operation or integration of the M&M Business or other unanticipated delays, costs, inefficiencies or liabilities; increased commercial, legal or regulatory complexity of entering into, or expanding our exposure to, certain end markets and geographies; risks in the global economy and equity and credit markets and their potential impact on our ability to pay down debt in the future and/or refinance at suitable rates, in a timely manner, or at all; diversion of management's attention from ongoing business operations and opportunities and other disruption caused by the M&M Acquisition and the integration processes and their impact on our existing business and relationships; risks and costs associated with increased leverage from the M&M Acquisition, including increased interest expense and potential reduction of business and strategic flexibility; the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance; 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; the ability to identify desirable potential acquisition or divestiture opportunities and to complete such transactions, including obtaining regulatory approvals, consistent with the Company's strategy; market acceptance of our products and technology; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, transportation, logistics or supply chain disruptions, cybersecurity incidents, terrorism or political unrest, public health crises (including, but not limited to, the COVID-19 pandemic), 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 (such as the Russia-Ukraine conflict) or terrorist incidents or as a result of weather, natural disasters, or other crises; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not limited to, adjustments, changes in estimates or interpretations or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in the United States and other jurisdictions; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change or other sustainability matters; potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, 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; tax rates and changes thereto; our ability to obtain regulatory approval for, and satisfy closing conditions to, any transactions described herein that have not closed; 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 two business segments, Engineered Materials and the 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, operating EBITDA margin, 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 operating EBITDA margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by (used in) operations.

Definitions of Non-US GAAP Financial Measures

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

  • Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. Operating EBITDA margin is defined by the Company as operating EBITDA divided by net sales.

  • 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 net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for contributions from or distributions to our noncontrolling interest joint ventures. We do not provide reconciliations for free cash flow 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 items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, 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.

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 November 6, 2023 and also available on our website at investors.celanese.com under Financial Information/Financial Document Library.

Results Unaudited

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

Supplemental Information

Additional information about our prior period performance is included in our Quarterly Reports on Form 10-Q and in our Non-US GAAP Financial Measures and Supplemental Information document.

Consolidated Statements of Operations - Unaudited

Three Months Ended

September 30,
2023

June 30,
2023

September 30,
2022

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

Net sales

2,723

2,795

2,301

Cost of sales

(2,050

)

(2,109

)

(1,755

)

Gross profit

673

686

546

Selling, general and administrative expenses

(244

)

(274

)

(184

)

Amortization of intangible assets

(41

)

(42

)

(10

)

Research and development expenses

(32

)

(40

)

(25

)

Other (charges) gains, net

(17

)

(10

)

(15

)

Foreign exchange gain (loss), net

15

(2

)

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

503

(2

)

Operating profit (loss)

842

335

308

Equity in net earnings (loss) of affiliates

12

23

73

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

(1

)

(2

)

25

Interest expense

(178

)

(182

)

(154

)

Refinancing expense

(7

)

Interest income

12

7

34

Dividend income - equity investments

30

31

30

Other income (expense), net

4

4

5

Earnings (loss) from continuing operations before tax

714

216

321

Income tax (provision) benefit

236

4

(127

)

Earnings (loss) from continuing operations

950

220

194

Earnings (loss) from operation of discontinued operations

(1

)

Income tax (provision) benefit from discontinued operations

1

(1

)

Earnings (loss) from discontinued operations

(1

)

1

(1

)

Net earnings (loss)

949

221

193

Net (earnings) loss attributable to noncontrolling interests

2

(1

)

(2

)

Net earnings (loss) attributable to Celanese Corporation

951

220

191

Amounts attributable to Celanese Corporation

Earnings (loss) from continuing operations

952

219

192

Earnings (loss) from discontinued operations

(1

)

1

(1

)

Net earnings (loss)

951

220

191

Earnings (loss) per common share - basic

Continuing operations

8.74

2.01

1.77

Discontinued operations

(0.01

)

0.01

(0.01

)

Net earnings (loss) - basic

8.73

2.02

1.76

Earnings (loss) per common share - diluted

Continuing operations

8.70

2.00

1.76

Discontinued operations

(0.01

)

0.01

(0.01

)

Net earnings (loss) - diluted

8.69

2.01

1.75

Weighted average shares (in millions)

Basic

108.9

108.9

108.4

Diluted

109.4

109.3

109.1

Consolidated Balance Sheets - Unaudited

As of

September 30,

2023

As of

December 31,

2022

(In $ millions)

ASSETS

Current Assets

Cash and cash equivalents

1,357

1,508

Trade receivables - third party and affiliates, net

1,339

1,379

Non-trade receivables, net

570

675

Inventories

2,337

2,808

Other assets

284

241

Total current assets

5,887

6,611

Investments in affiliates

1,245

1,062

Property, plant and equipment, net

5,467

5,584

Operating lease right-of-use assets

395

413

Deferred income taxes

1,074

808

Other assets

535

547

Goodwill

6,991

7,142

Intangible assets, net

3,944

4,105

Total assets

25,538

26,272

LIABILITIES AND EQUITY

Current Liabilities

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

1,408

1,306

Trade payables - third party and affiliates

1,263

1,518

Other liabilities

927

1,201

Income taxes payable

18

43

Total current liabilities

3,616

4,068

Long-term debt, net of unamortized deferred financing costs

12,291

13,373

Deferred income taxes

1,223

1,242

Uncertain tax positions

276

322

Benefit obligations

396

411

Operating lease liabilities

334

364

Other liabilities

453

387

Commitments and Contingencies

Stockholders' Equity

Treasury stock, at cost

(5,490

)

(5,491

)

Additional paid-in capital

386

372

Retained earnings

12,308

11,274

Accumulated other comprehensive income (loss), net

(713

)

(518

)

Total Celanese Corporation stockholders' equity

6,491

5,637

Noncontrolling interests

458

468

Total equity

6,949

6,105

Total liabilities and equity

25,538

26,272

Non-US GAAP Financial Measures and Supplemental Information

November 6, 2023

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 two business segments, Engineered Materials and the 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/Financial Document Library page of our website, investors.celanese.com, to the extent practicable, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

This document includes definitions and reconciliations of non-GAAP financial measures used from time to time by the Company.

Specific Measures Used

This document provides information about the following non-GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, operating profit (loss) attributable to Celanese Corporation, adjusted earnings per share, net debt, free cash flow and return on invested capital (adjusted). The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin and operating EBITDA margin is operating margin; for operating profit (loss) attributable to Celanese Corporation is operating profit (loss); for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; for net debt is total debt; for free cash flow is net cash provided by (used in) operations; and for return on invested capital (adjusted) is net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity.

Definitions

  • Adjusted EBIT is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense and taxes, and further adjusted for Certain Items (refer to Table 8). We believe that adjusted EBIT provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of unusual, non-operational or restructuring-related activities that affect comparability. Our management recognizes that adjusted EBIT has inherent limitations because of the excluded items. Adjusted EBIT is one of the measures management uses for planning and budgeting, monitoring and evaluating financial and operating results and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted EBIT on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information. Adjusted EBIT margin is defined by the Company as adjusted EBIT divided by net sales. Adjusted EBIT margin has the same uses and limitations as Adjusted EBIT.

  • Operating EBITDA is a performance measure used by the Company and is defined by the Company as net earnings (loss) attributable to Celanese Corporation, plus (earnings) loss from discontinued operations, less interest income, plus interest expense, plus refinancing expense, taxes and depreciation and amortization, and further adjusted for Certain Items, which Certain Items include accelerated depreciation and amortization expense. Operating EBITDA is equal to adjusted EBIT plus depreciation and amortization. We believe that Operating EBITDA provides transparent and useful information to investors, analysts and other parties in evaluating our operating performance relative to our peer companies. Operating EBITDA margin is defined by the Company as Operating EBITDA divided by net sales. Operating EBITDA margin has the same uses and limitations as Operating EBITDA.

  • Operating profit (loss) attributable to Celanese Corporation is defined by the Company as operating profit (loss), less earnings (loss) attributable to noncontrolling interests ("NCI"). We believe that operating profit (loss) attributable to Celanese Corporation provides transparent and useful information to management, investors, analysts and other parties in evaluating our core operational performance. Operating margin attributable to Celanese Corporation is defined by the Company as operating profit (loss) attributable to Celanese Corporation divided by net sales. Operating margin attributable to Celanese Corporation has the same uses and limitations as Operating profit (loss) attributable to Celanese Corporation.

  • Adjusted earnings per share is a performance measure used by the Company and is defined by the Company as earnings (loss) from continuing operations attributable to Celanese Corporation, adjusted for income tax (provision) benefit, Certain Items, and refinancing and related expenses, divided by the number of basic common shares and dilutive restricted stock units and stock options calculated using the treasury method. We believe that adjusted earnings per share provides transparent and useful information to management, investors, analysts and other parties in evaluating and assessing our primary operating results from period-to-period after removing the impact of the above stated items that affect comparability and as a performance metric in the Company's incentive compensation plan. We do not provide reconciliations for adjusted earnings per share on a forward-looking basis (including those contained in this document) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of Certain Items, such as mark-to-market pension gains and losses, that have not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

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

  • Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operations, less capital expenditures on property, plant and equipment, and adjusted for contributions from or distributions to our NCI joint ventures. 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. Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain debt service and finance lease payments that are not deducted from that measure. We do not provide reconciliations for free cash flow on a forward-looking basis 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 items such as working capital changes, fluctuations in foreign currency exchange rates, the impact and timing of potential acquisitions and divestitures, and other structural changes, 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.

  • 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. 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

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

Q3 '23

Q2 '23

Q1 '23

2022

Q4 '22

Q3 '22

Q2 '22

Q1 '22

(In $ millions)

Net earnings (loss) attributable to Celanese Corporation

951

220

91

1,894

767

191

434

502

(Earnings) loss from discontinued operations

1

(1

)

3

8

1

1

6

Interest income

(12

)

(7

)

(8

)

(69

)

(33

)

(34

)

(1

)

(1

)

Interest expense

178

182

182

405

168

154

48

35

Refinancing expense

7

Income tax provision (benefit)

(236

)

(4

)

25

(489

)

(840

)

127

112

112

Certain Items attributable to Celanese Corporation (Table 8)

(438

)

54

131

422

239

71

47

65

Adjusted EBIT

451

444

424

2,171

302

510

646

713

Depreciation and amortization expense(1)

173

172

172

446

151

97

98

100

Operating EBITDA

624

616

596

2,617

453

607

744

813

Q3 '23

Q2 '23

Q1 '23

2022

Q4 '22

Q3 '22

Q2 '22

Q1 '22

(In $ millions)

Engineered Materials

13

2

3

4

4

Acetyl Chain

2

2

Other Activities(2)

1

1

Accelerated depreciation and amortization expense

16

2

3

5

6

Depreciation and amortization expense(1)

173

172

172

446

151

97

98

100

Total depreciation and amortization expense

173

172

172

462

153

100

103

106

___________________________

(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, 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 1a

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

Q3 '23

Q2 '23

Q1 '23

Q4 '22

(In $ millions)

Net earnings (loss) attributable to M&M

47

47

(48

)

(69

)

(3)

Income tax provision (benefit)

10

(1

)

13

6

Certain Items(1)

17

18

86

72

Adjusted EBIT

74

64

51

9

Depreciation and amortization expense

70

68

68

47

Operating EBITDA(2)

144

132

119

56

(4)

_________________________

(1)

Amount is included within total Certain Items shown in Table 8.

(2)

Excludes $(19) million, $(23) million, $(23) million and $(17) million of Operating EBITDA included in Other Activities for the three months ended September 30, 2023, June 30, 2023, March 31, 2023 and December 31, 2022, respectively.

(3)

Excludes $30 million of Net loss for the month ended October 31, 2022, prior to our acquisition of the majority of the Mobility & Materials business ("M&M Business") of DuPont de Nemours, Inc.

(4)

Excludes $22 million of Operating EBITDA for the month ended October 31, 2022, prior to our acquisition of the M&M Business.

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

Q3 '23

Q2 '23

Q1 '23

2022

Q4 '22

Q3 '22

Q2 '22

Q1 '22

(In $ millions, except percentages)

Operating Profit (Loss) / Operating Margin

Engineered Materials

691

45.2

%

158

10.0

%

112

6.9

%

429

10.7

%

25

2.0

%

114

12.3

%

166

17.5

%

124

13.6

%

Acetyl Chain

272

22.3

%

295

23.9

%

278

22.2

%

1,447

25.2

%

204

18.0

%

312

22.3

%

428

27.5

%

503

30.4

%

Other Activities(1)

(121

)

(118

)

(139

)

(498

)

(173

)

(118

)

(111

)

(96

)

Total

842

30.9

%

335

12.0

%

251

8.8

%

1,378

14.2

%

56

2.4

%

308

13.4

%

483

19.4

%

531

20.9

%

Less: Net Earnings (Loss) Attributable to NCI for Engineered Materials

(2

)

(2

)

Less: Net Earnings (Loss) Attributable to NCI for Acetyl Chain

3

2

8

2

2

2

2

Operating Profit (Loss) Attributable to Celanese Corporation

844

31.0

%

334

11.9

%

249

8.7

%

1,370

14.2

%

54

2.3

%

306

13.3

%

481

19.3

%

529

20.8

%

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

Engineered Materials

693

45.4

%

160

10.1

%

112

6.9

%

429

10.7

%

25

2.0

%

114

12.3

%

166

17.5

%

124

13.6

%

Acetyl Chain

272

22.3

%

292

23.7

%

276

22.1

%

1,439

25.1

%

202

17.8

%

310

22.2

%

426

27.3

%

501

30.3

%

Other Activities(1)

(121

)

(118

)

(139

)

(498

)

(173

)

(118

)

(111

)

(96

)

Total

844

31.0

%

334

11.9

%

249

8.7

%

1,370

14.2

%

54

2.3

%

306

13.3

%

481

19.3

%

529

20.8

%

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

Engineered Materials

12

20

10

207

35

70

53

49

Acetyl Chain

33

32

34

143

30

34

39

40

Other Activities(1)

1

6

(1

)

12

1

4

1

6

Total

46

58

43

362

66

108

93

95

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

Engineered Materials

Acetyl Chain

Other Activities(1)

(1

)

(2

)

1

17

(57

)

25

25

24

Total

(1

)

(2

)

1

17

(57

)

25

25

24

Certain Items Attributable to Celanese Corporation (Table 8)

Engineered Materials

(476

)

25

93

143

78

22

5

38

Acetyl Chain

5

8

6

27

10

5

10

2

Other Activities(1)

33

21

32

252

151

44

32

25

Total

(438

)

54

131

422

239

71

47

65

Adjusted EBIT / Adjusted EBIT Margin

Engineered Materials

229

15.0

%

205

12.9

%

215

13.2

%

779

19.4

%

138

11.2

%

206

22.2

%

224

23.6

%

211

23.2

%

Acetyl Chain

310

25.4

%

332

26.9

%

316

25.3

%

1,609

28.0

%

242

21.3

%

349

25.0

%

475

30.5

%

543

32.9

%

Other Activities(1)

(88

)

(93

)

(107

)

(217

)

(78

)

(45

)

(53

)

(41

)

Total

451

16.6

%

444

15.9

%

424

14.9

%

2,171

22.4

%

302

12.9

%

510

22.2

%

646

26.0

%

713

28.1

%

______________

(1)

Other Activities includes corporate SG&A expenses, 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 (cont.)

Q3 '23

Q2 '23

Q1 '23

2022

Q4 '22

Q3 '22

Q2 '22

Q1 '22

(In $ millions, except percentages)

Depreciation and Amortization Expense(1)

Engineered Materials

111

112

112

213

90

40

41

42

Acetyl Chain

55

54

54

211

52

53

52

54

Other Activities(2)

7

6

6

22

9

4

5

4

Total

173

172

172

446

151

97

98

100

Operating EBITDA / Operating EBITDA Margin

Engineered Materials

340

22.3

%

317

20.0

%

327

20.1

%

992

24.7

%

228

18.4

%

246

26.5

%

265

28.0

%

253

27.8

%

Acetyl Chain

365

29.9

%

386

31.3

%

370

29.6

%

1,820

31.7

%

294

25.9

%

402

28.8

%

527

33.8

%

597

36.1

%

Other Activities(2)

(81

)

(87

)

(101

)

(195

)

(69

)

(41

)

(48

)

(37

)

Total

624

22.9

%

616

22.0

%

596

20.9

%

2,617

27.1

%

453

19.3

%

607

26.4

%

744

29.9

%

813

32.0

%

______________________

(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, results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 3

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

Q3 '23

Q2 '23

Q1 '23

2022

Q4 '22

Q3 '22

Q2 '22

Q1 '22

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

952

8.70

219

2.00

94

0.86

1,902

17.41

768

7.03

192

1.76

440

4.03

502

4.61

Income tax provision (benefit)

(236

)

(4

)

25

(489

)

(840

)

127

112

112

Earnings (loss) from continuing operations before tax

716

215

119

1,413

(72

)

319

552

614

Certain Items attributable to Celanese Corporation (Table 8)

(438

)

54

131

422

239

71

47

65

Refinancing and related expenses

7

158

(1)

14

(1)

104

(1)

26

(1)

14

(1)

Adjusted earnings (loss) from continuing operations before tax

285

269

250

1,993

181

494

625