Celanese Corporation Reports Full Year 2017 and Fourth Quarter Earnings; Increases 2018 Outlook
DALLAS, Jan 25, 2018 (BUSINESS WIRE) --
Copyright Business Wire 2018
Celanese Corporation (NYSE: CE), a global technology and specialty
materials company, today reported GAAP diluted earnings per share of
$6.19 and adjusted earnings per share of $7.51 for 2017. The company
also reported fourth quarter GAAP diluted earnings per share of $1.50
and adjusted earnings per share of $1.98. Financial performance for the
year was driven by strong contributions from Advanced Engineered
Materials (AEM) and the Acetyl Chain which more than offset the decline
in Consumer Specialties. Advanced Engineered Materials grew through the
success of the opportunity pipeline, increased penetration into China,
integration of the SO.F.TER. and Nilit acquisitions, and better
performance in joint ventures. Recently, Celanese announced an agreement
to acquire Omni Plastics, a custom compounder, which will expand its
specialty polymer portfolio and broaden its exposure to new end markets.
The Acetyl Chain progressively strengthened through the year as the
business model advanced and overcame headwinds from Hurricane Harvey and
a major planned turnaround.
Fourth Quarter and Full Year 2017 Highlights:
Full Year Business Segment Overview
Materials Solutions
Materials Solutions' net sales grew 21 percent over 2016 to $2.9 billion
as growth in AEM outweighed the step-down in Consumer Specialties,
mainly tow. GAAP operating profit was $601 million and core income was
$900 million for the year. Advanced Engineered Materials outperformed
prior years driven by growth in its base business, new acquisitions, and
higher affiliate earnings. Operating profit of $383 million was the
second highest ever and segment income of $567 million was an all time
high. Volume in AEM increased year over year with advancements in the
opportunity pipeline, the acquisition of SO.F.TER. and Nilit, and growth
across regions, particularly in Asia. For the year, 2,232 new projects
were commercialized. This 61 percent increase in project
commercializations from 2016 underscores AEM's ability to address demand
from customers for a solutions-based partnership via the opportunity
pipeline model. In just a few years, the business has grown project
completions multi-fold by mapping customer options to polymer solutions,
organizing projects into programs, prioritizing internal resources, and
translating that success across end-uses.
Consumer Specialties' GAAP operating profit was $218 million and segment
income was $333 million. In line with expectations, tow price and volume
stepped down in 2017 from 2016 due to depressed tow industry utilization
rates and offset gains from productivity initiatives.
Affiliate earnings in Materials Solutions was $278 million and the
increase over prior year was driven by higher MTBE pricing in Ibn Sina
along with better results at the polymer joint ventures. Earnings from
acetate tow joint ventures in China were consistent year over year.
Acetyl Chain
The Acetyl Chain recorded the third highest GAAP operating profit of
$511 million and second highest ever core income of $575 million. These
results were achieved despite constrained volumes in the second quarter
from a significant planned turnaround in Clear Lake, Texas and
disruption in the US Gulf Coast from Hurricane Harvey in the third
quarter. Operating profit margin was 15.2 percent, a 50 basis points
improvement over the previous high in 2014, and core income margin was
17.1 percent, a 260 basis point expansion from the prior high in 2016.
The business identified and executed on multiple opportunities to drive
margin enhancing growth, particularly in acetic acid in Asia, and
overcame raw material cost inflation, specifically methanol. The robust
results for the year benefited from the business's ability to manage
demand and raw material volatility with unique assets and a global
supply chain.
Recent Highlights
--
Demonstrated the Acetyl Chain's capabilities to address a dynamic
market with multiple supply dislocations, particularly in the second
half of 2017.
--
Completed 587 projects in the fourth quarter, the highest ever in AEM.
Total new project commercializations in 2017 were 2,232, a 61 percent
increase year over year.
--
Signed a definitive agreement to acquire Omni Plastics and its
subsidiaries, including the distributor Resinal de Mexico. Omni
Plastics specializes in custom compounding of various engineered
thermoplastics with a compounding facility in Evansville, Indiana, and
additional offices in Mexico City.
--
Received regulatory approvals for the acetate tow joint venture in
Mexico, Turkey, Russia, and China, four out of six jurisdictions
requiring approval. Confirmed receipt of a statement of objections
from the European Commission as part of the Phase II review process.
Completed major carve-out milestone to create a new legal entity and
operating structure for the cellulose derivatives business, in
preparation for contribution to the JV upon close.
--
Declared the polyacetal facility at the Ibn Sina joint venture
commercially operational as of the beginning of the fourth quarter.
Upon successful startup of the polyacetal facility, Celanese's
economic interest in Ibn Sina increased from 25 percent to 32.5
percent.
--
Completed a public offering of EUR300 million aggregate principal amount
of 1.25% Senior Notes due 2025, using net proceeds primarily for a
voluntary contribution to fully fund qualified U.S. pension plans.
Fourth Quarter Business Segment Overview
Materials Solutions
Materials Solutions reported record net sales of $735 million in the
fourth quarter, a 25 percent improvement over 2016. Growth in AEM from
new project introductions and acquisitions partially offset the decline
in Consumer Specialties from tow. AEM delivered the second highest
fourth quarter GAAP operating profit of $91 million and the highest ever
fourth quarter segment income of $135 million. The strong fourth quarter
included a concerted effort to dampen seasonality through diversifying
geographies and applications by focusing on solutions-based customer
interaction. The opportunity pipeline expanded by 587 projects in the
quarter continuing the traction with customers in identifying
possibilities for value enhancement. Operating profit margin of 16.5
percent and segment income margin of 24.5 percent were lower year over
year with new acquisitions contributing to margin dilution and
temporarily higher plant costs in the quarter. Margins are
expected to recover as synergies from recent acquisitions are realized
in 2018 and beyond. Contributions from higher volumes and affiliate
earnings more than offset higher raw material and plant costs.
Acetate tow price and volume declined in the fourth quarter year over
year due to lower tow industry utilization which was in line with
expectations. Sequentially, results were largely consistent.
Acetyl Chain
The Acetyl Chain's net sales for the quarter were $888 million, 19
percent higher than the same quarter last year, driven by increases in
price. GAAP operating profit of $176 million was the third highest ever
and core income of $178 million was a fourth quarter record, a 107
percent improvement over the same quarter in 2016. The Acetyl Chain was
particularly well-positioned and the flexibility in its global supply
chain enabled it to respond quickly to changes in instantaneous
utilization rates, particularly in China. GAAP operating margin of 19.8
percent and core income margin of 20.0 percent were both records. The
business used its model and better market dynamics to increase prices,
mainly in acetic acid, in excess of rising raw material input costs,
mainly methanol and ethylene.
Cash Flow and Tax
Operating cash flow was $803 million for the year. Free cash flow was
$825 million before taking into account the $316 million voluntary
contribution to fully fund qualified U.S. pension plans. Capex for the
year was $267 million, including $140 million of growth investment.
$741 million of cash was returned to shareholders, repurchasing 5.4
million shares for $500 million and distributing $241 million in
dividends for the year. As of December 31, 2017, $1.5 billion remains
under the current share repurchase authorization.
As a result of the recent Tax Cuts and Jobs Act of 2017, a net tax
expense of $90 million was recognized in the fourth quarter of 2017,
with tax on deemed repatriation of accumulated foreign earnings
partially offset by a reduction of deferred tax liabilities. A net tax
benefit of $76 million was recognized related to foreign tax credits
generated from reorganization of the acetate tow business in preparation
for the acetate tow joint venture. These amounts were excluded from the
adjusted rate. No material cash impact is expected from the deemed
repatriation due to existing foreign tax credit carryforwards.
Outlook
"We set out in 2017 to further strengthen our business models in both
AEM and the Acetyl Chain while addressing the headwinds in Consumer
Specialties. In AEM, we made progress on integrating two high value-add
acquisitions. Organic growth was further enhanced by extending the
opportunity pipeline to the newly integrated polymers, creating current
and future earnings uplift. In the Acetyl Chain, the business planned
efficiently to address the scheduled turnaround in Clear Lake and also
responded swiftly to address industry disruptions by leveraging its
global supply chain. As a result, in 2017 we reported the second highest
operating profit of $901 million and record adjusted EBIT of $1.4
billion. In 2018, we expect the AEM pipeline model to evolve to a higher
level of project volume and the Acetyl Chain to carry forward the
momentum from its improved model. Tow earnings should be relatively
flat. An early read on the recent tax reform indicates a 2 percent lower
adjusted tax rate of 14 percent for Celanese in 2018. Taking all these
drivers into consideration, current estimations for 2018 put growth of
adjusted earnings per share in the 10-14 percent range, with more of the
growth in the first half of the year," 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 www.celanese.com
under Investor Relations/Events and Presentations after market close on
January 25, 2018. 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 two complementary
business cores, Acetyl Chain and Materials Solutions, use the full
breadth of Celanese's global chemistry, technology and business
expertise to create value for our customers 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 7,600 employees worldwide and had 2017 net sales of
$6.1 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 including the announced
stock purchase transaction. There can be no assurance that the company
will realize these expectations or that these beliefs will prove correct.
There are a number of risks and uncertainties that could cause actual
results to differ materially from the results expressed or implied in
the forward-looking statements contained in this release, including with
respect to the acquisition. 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 business segments in two
subtotals, reflecting our two cores, the Acetyl Chain and Materials
Solutions, based on similarities among customers, business models and
technical processes. As described in the Company's annual report on Form
10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the
Company's Acetyl Intermediates segment and the Industrial Specialties
segment. Materials Solutions includes the Company's Advanced Engineered
Materials segment and the Consumer Specialties segment.
Use of Non-US GAAP Financial Information
This release uses the following Non-US GAAP measures: adjusted EBIT,
adjusted EBIT margin, operating EBITDA, adjusted earnings per share and
free cash flow. These measures are not recognized in accordance with US
GAAP and should not be viewed as an alternative to US GAAP measures of
performance or liquidity. The most directly comparable financial measure
presented in accordance with US GAAP in our consolidated financial
statements for adjusted EBIT and operating EBITDA is net earnings (loss)
attributable to Celanese Corporation; for adjusted EBIT margin is
operating margin; for adjusted earnings per share is earnings (loss)
from continuing operations attributable to Celanese Corporation per
common share-diluted; and for free cash flow is net cash provided by
(used in) operations.
Definitions of Non-US GAAP Financial Measures
--
Adjusted EBIT is a performance measure used by the Company and is
defined by the Company as net earnings (loss) attributable to Celanese
Corporation, plus (earnings) loss from discontinued operations, less
interest income, plus interest expense, plus refinancing expense and
taxes, and further adjusted for Certain Items (refer to Table 8 of our
Non-US GAAP Financial Measures and Supplemental Information document).
We may provide guidance on adjusted EBIT but are unable to reconcile
forecasted adjusted EBIT to a US GAAP financial measure without
unreasonable efforts because a forecast of Certain Items, such as
mark-to-market pension gains and losses, which may be significant, is
not practical. Adjusted EBIT margin is defined by the Company as
adjusted EBIT divided by net sales.
--
Adjusted EBIT by business segment may also be referred to by
management as segment income. Adjusted EBIT by core (i.e. Acetyl Chain
and/or Materials Solutions) may also be referred to by management as
core income. Adjusted EBIT margin by business segment may also be
referred to by management as segment income margin. Adjusted EBIT
margin by core may also be referred to by management as core income
margin.
--
Operating EBITDA is a performance measure used by the Company and
is defined by the Company as net earnings (loss) attributable to
Celanese Corporation, plus (earnings) loss from discontinued
operations, less interest income, plus interest expense, plus
refinancing expense, taxes and depreciation and amortization, and
further adjusted for Certain Items, which Certain Items include
accelerated depreciation and amortization expense. Operating EBITDA is
equal to adjusted EBIT plus depreciation and amortization.
--
Adjusted earnings per share is a performance measure used by the
Company and is defined by the Company as earnings (loss) from
continuing operations attributable to Celanese Corporation, adjusted
for income tax (provision) benefit, Certain Items, and refinancing and
related expenses, divided by the number of basic common shares and
dilutive restricted stock units and stock options calculated using the
treasury method. We may provide guidance on adjusted earnings per
share but are unable to reconcile forecasted adjusted earnings per
share to a US GAAP financial measure without unreasonable efforts
because a forecast of Certain Items, such as mark-to-market pension
gains and losses, which may be significant, is not practical. Note:
The income tax expense (benefit) on Certain Items ("Non-GAAP
adjustments") is determined using the applicable rates in the taxing
jurisdictions in which the Non-GAAP adjustments occurred and includes
both current and deferred income tax expense (benefit). The income tax
rate used for adjusted earnings per share approximates the midpoint in
a range of forecasted tax rates for the year. This range may include
certain partial or full-year forecasted tax opportunities and related
costs, where applicable, and specifically excludes changes in
uncertain tax positions, discrete recognition of GAAP items on a
quarterly basis, other pre-tax items adjusted out of our GAAP earnings
for adjusted earnings per share purposes, and changes in management's
assessments regarding the ability to realize deferred tax assets for
GAAP. In determining the adjusted earnings per share tax rate, we
reflect the impact of foreign tax credits when utilized, or expected
to be utilized, absent discrete events impacting the timing of foreign
tax credit utilization. We analyze this rate quarterly and adjust it
if there is a material change in the range of forecasted tax rates; an
updated forecast would not necessarily result in a change to our tax
rate used for adjusted earnings per share. The adjusted tax rate is an
estimate and may differ from the actual tax rate used for GAAP
reporting in any given reporting period. Table 3a of our Non-US GAAP
Financial Measures and Supplemental Information document summarizes
the reconciliation of our estimated GAAP effective tax rate to the
adjusted tax rate. The estimated GAAP rate excludes discrete
recognition of GAAP items due to our inability to forecast such items.
As part of the year-end reconciliation, we will update the
reconciliation of the GAAP effective tax rate to the adjusted tax rate
for actual results.
--
Free cash flow is a liquidity measure used by the Company and is
defined by the Company as cash flow from operations, less capital
expenditures on property, plant and equipment, and adjusted for
capital contributions from or distributions to Mitsui & Co., Ltd.
("Mitsui") related to our methanol joint venture, Fairway Methanol LLC
("Fairway").
Reconciliation of Non-US GAAP Financial Measures
Reconciliations of the Non-US GAAP financial measures used in this
press release to the comparable US GAAP financial measure, together with
information about the purposes and uses of non-US GAAP financial
measures, are included in our Non-US GAAP Financial Measures and
Supplemental Information document filed as an exhibit to our Current
Report on Form 8-K filed with the SEC on or about January 25, 2018 and
also available on our website at www.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.
Non-US GAAP Financial Measures and Supplemental
Information
January 25, 2018
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 business segments in two
subtotals, reflecting our two cores, the Acetyl Chain and Materials
Solutions, based on similarities among customers, business models and
technical processes. As described in the Company's annual report on Form
10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the
Company's Acetyl Intermediates segment and the Industrial Specialties
segment. Materials Solutions includes the Company's Advanced Engineered
Materials segment and the Consumer Specialties segment.
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 Investor Relations/Financial
Information/SEC Filings page of our website, www.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 Investor Relations/Financial Information/Non-GAAP
Financial Measures page of our website, www.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 may provide guidance on
adjusted EBIT but are unable to reconcile forecasted adjusted EBIT to
a US GAAP financial measure without unreasonable efforts because a
forecast of Certain Items, such as mark-to-market pension gains and
losses, which may be significant, is not practical. Adjusted EBIT
margin is defined by the Company as adjusted EBIT divided by net
sales. Adjusted EBIT margin has the same uses and limitations as
Adjusted EBIT.
--
Adjusted EBIT by core (i.e. Acetyl Chain and/or Materials
Solutions) may also be referred to by management as core income.
Adjusted EBIT margin by core may also be referred to by management as
core income margin. Adjusted EBIT by business segment may also be
referred to by management as segment income. Adjusted EBIT margin by
business segment may also be referred to by management as segment
income margin.
--
Operating EBITDA is a performance measure used by the Company and
is defined by the Company as net earnings (loss) attributable to
Celanese Corporation, plus (earnings) loss from discontinued
operations, less interest income, plus interest expense, plus
refinancing expense, taxes and depreciation and amortization, and
further adjusted for Certain Items, which Certain Items include
accelerated depreciation and amortization expense. Operating EBITDA is
equal to adjusted EBIT plus depreciation and amortization. We believe
that Operating EBITDA provides transparent and useful information to
investors, analysts and other parties in evaluating our operating
performance relative to our peer companies. Operating EBITDA margin is
defined by the Company as Operating EBITDA divided by net sales.
Operating EBITDA margin has the same uses and limitations as Operating
EBITDA.
--
Operating profit (loss) attributable to Celanese Corporation is
defined by the Company as operating profit (loss), less earnings
(loss) attributable to noncontrolling interests ("NCI"). We believe
that operating profit (loss) attributable to Celanese Corporation
provides transparent and useful information to management, investors,
analysts and other parties in evaluating our core operational
performance. Operating margin attributable to Celanese Corporation is
defined by the Company as operating profit (loss) attributable to
Celanese Corporation divided by net sales. Operating margin
attributable to Celanese Corporation has the same uses and limitations
as Operating profit (loss) attributable to Celanese Corporation.
--
Adjusted earnings per share is a performance measure used by the
Company and is defined by the Company as earnings (loss) from
continuing operations attributable to Celanese Corporation, adjusted
for income tax (provision) benefit, Certain Items, and refinancing and
related expenses, divided by the number of basic common shares and
dilutive restricted stock units and stock options calculated using the
treasury method. We believe that adjusted earnings per share provides
transparent and useful information to management, investors, analysts
and other parties in evaluating and assessing our primary operating
results from period-to-period after removing the impact of the above
stated items that affect comparability and as a performance metric in
the Company's incentive compensation plan. We may provide guidance on
adjusted earnings per share but are unable to reconcile forecasted
adjusted earnings per share to a GAAP financial measure without
unreasonable efforts because a forecast of Certain Items, such as
mark-to-market pension gains and losses, which may be significant, is
not practical. Note: The income tax expense
(benefit) on Certain Items ("Non-GAAP adjustments") is determined
using the applicable rates in the taxing jurisdictions in which the
Non-GAAP adjustments occurred and includes both current and deferred
income tax expense (benefit). The income tax rate used for adjusted
earnings per share approximates the midpoint in a range of forecasted
tax rates for the year. This range may include certain partial or
full-year forecasted tax opportunities and related costs, where
applicable, and specifically excludes changes in uncertain tax
positions, discrete recognition of GAAP items on a quarterly basis,
other pre-tax items adjusted out of our GAAP earnings for adjusted
earnings per share purposes and changes in management's assessments
regarding the ability to realize deferred tax assets for GAAP. In
determining the adjusted earnings per share tax rate, we reflect the
impact of foreign tax credits when utilized, or expected to be
utilized, absent discrete events impacting the timing of foreign tax
credit utilization. We analyze this rate quarterly and adjust it if
there is a material change in the range of forecasted tax rates; an
updated forecast would not necessarily result in a change to our tax
rate used for adjusted earnings per share. The adjusted tax rate is an
estimate and may differ from the actual tax rate used for GAAP
reporting in any given reporting period. Table 3a summarizes the
reconciliation of our estimated GAAP effective tax rate to the
adjusted tax rate. The estimated GAAP rate excludes discrete
recognition of GAAP items due to our inability to forecast such items.
As part of the year-end reconciliation, we will update the
reconciliation of the GAAP effective tax rate to the adjusted tax rate
for actual results.
--
Free cash flow is a liquidity measure used by the Company and is
defined by the Company as net cash provided by (used in) operations,
less capital expenditures on property, plant and equipment, and
adjusted for capital contributions from or distributions to Mitsui &
Co., Ltd. ("Mitsui") related to our methanol joint venture, Fairway
Methanol LLC ("Fairway"). We believe that free cash flow provides
useful information to management, investors, analysts and other
parties in evaluating the Company's liquidity and credit quality
assessment because it provides an indication of the long-term cash
generating ability of our business. Although we use free cash flow as
a measure to assess the liquidity generated by our business, the use
of free cash flow has important limitations, including that free cash
flow does not reflect the cash requirements necessary to service our
indebtedness, lease obligations, unconditional purchase obligations or
pension and postretirement funding obligations.
--
Net debt is defined by the Company as total debt less cash and cash
equivalents. We believe that net debt provides useful information to
management, investors, analysts and other parties in evaluating
changes to the Company's capital structure and credit quality
assessment.
--
Return on invested capital (adjusted) is defined by the Company as
adjusted EBIT, tax effected using the adjusted tax rate, divided by
the sum of the average of beginning and end of the year short- and
long-term debt and Celanese Corporation stockholders' equity. We
believe that return on invested capital (adjusted) provides useful
information to management, investors, analysts and other parties in
order to assess our income generation from the point of view of our
stockholders and creditors who provide us with capital in the form of
equity and debt and whether capital invested in the Company yields
competitive returns. In addition, achievement of certain predetermined
targets relating to return on invested capital (adjusted) is one of
the factors we consider in determining the amount of performance-based
compensation received by our management.
Supplemental Information
Supplemental Information we believe to be of interest to investors,
analysts and other parties includes the following:
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Net sales for Materials Solutions, the Acetyl Chain and each of our
business segments and the percentage increase or decrease in net sales
attributable to price, volume, currency and other factors for
Materials Solutions, the Acetyl Chain and each of our business
segments.
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Cash dividends received from our equity and cost investments.
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For those consolidated ventures in which the Company owns or is
exposed to less than 100% of the economics, the outside stockholders'
interests are shown as NCI. Beginning in 2014, this includes Fairway
for which the Company's ownership percentage is 50%. Amounts referred
to as "attributable to Celanese Corporation" are net of any applicable
NCI.
Results Unaudited
The results in this document, together with the adjustments made to
present the results on a comparable basis, have not been audited and are
based on internal financial data furnished to management. Quarterly
results should not be taken as an indication of the results of
operations to be reported for any subsequent period or for the full
fiscal year.
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SOURCE: Celanese Corporation
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