Your SlideShare is downloading. ×
celanese q2_2006_presentation
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

celanese q2_2006_presentation

133
views

Published on

Published in: Economy & Finance, Business

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
133
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Celanese 2Q 2006 Earnings Conference Call / Webcast Tuesday, August 1, 2006 10:00 a.m. CT Dave Weidman, President and CEO John J. Gallagher III, Executive Vice President and CFO 1
  • 2. Forward Looking Statements, Reconciliation and Use of Non-GAAP Measures to U.S. GAAP 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. When used in this release, the words “outlook,” “forecast,” “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or similar expressions are intended to identify forward-looking statements. 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 forward-looking statements contained in this release. Numerous factors, many of which are beyond the company’s control, could cause actual results to differ materially from those expressed as forward-looking statements. Certain of these risk factors are discussed 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. This release reflects three performance measures, operating EBITDA, adjusted earnings per share and net debt as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S. GAAP in our consolidated financial statements for operating EBITDA is operating profit; for adjusted earnings per share is earnings per common share-diluted; and for net debt is total debt. Use of Non-U.S. GAAP Financial Information Operating EBITDA, a measure used by management to measure performance, is defined as operating profit from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and amortization, and further adjusted for special charges and other adjustments. Our management believes operating EBITDA is useful to investors because it is one of the primary measures our management uses for its planning and budgeting processes and to monitor and evaluate financial and operating results. Operating EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to operating profit as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of operating EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, operating EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements nor does it represent the amount used in our debt covenants. Adjusted earnings per share is a measure used by management to measure performance. It is defined as net earnings (loss) available to common shareholders plus preferred dividends, adjusted for special charges and other adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We believe that the presentation of this non- U.S. GAAP measure provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when U.S. GAAP information is viewed in conjunction with non-U.S. GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. This non- U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. Net debt is defined as total debt less cash and cash equivalents. We believe that the presentation of this non-U.S. GAAP measure provides useful information to management and investors regarding changes to the company’s capital structure. Our management and credit analysts use net debt to evaluate the company's capital structure and assess credit quality. This non-U.S. GAAP information is not intended to be considered in isolation or as a substitute for U.S. GAAP financial information. 2
  • 3. Dave Weidman President and Chief Executive Officer 3
  • 4. Celanese Corporation Q2 2006 Highlights in $ millions (except EPS) 2nd Qtr 2006 2nd Qtr 2005 Net Sales 1,674 1,506 Diluted Adjusted EPS* 0.71 0.53 Operating EBITDA 308 262 Net sales increase 11% from prior year Operating profit rises 7% on strong business performance, fewer special charges and cost improvement Diluted adjusted EPS up 34% to $0.71 Operating EBITDA increases 18% to $308 million driven by strong affiliate performance * Based on diluted shares of 172.1 million as of June 30, 2006, and a 28% effective tax rate 4
  • 5. John J. Gallagher III Executive Vice President and Chief Financial Officer 5
  • 6. Celanese Corporation Financial Highlights in $ millions (except EPS) 2nd Qtr 2006 2nd Qtr 2005 Net Sales 1,674 1,506 SG&A (153) (135) Operating Profit 163 152 Net Earnings 103 67 Special Items Special Charges (12) (27) Other Adjustments (13) 14 Diluted Adjusted EPS* $0.71 0.53 Operating EBITDA 308 262 * Based on diluted shares of 172.1 million as of June 30, 2006, and a 28% effective tax rate 6
  • 7. Chemical Products 2nd Qtr 2006 in $ millions Net Sales $1,194 up 10% Operating EBITDA $206 up 8% Second Quarter 2006: Strong earnings on continued high utilization across industry, inclusion of sales from Acetex acquisition Some margin compression in basic chemicals acetyl derivatives Higher dividends from Saudi cost investment (IBN Sina) Strong integrated chain of acetyl products 7
  • 8. Ticona Technical Polymers 2nd Qtr 2006 in $ millions Net Sales $230 up 3% Operating EBITDA $67 up 22% Second Quarter 2006: Operating margins expanded on increased sales and reduced spending Increased penetration in key customer segments Improved demand in European market Raw materials continue to be volatile Focus on increased growth through innovation 8
  • 9. Acetate Products 2nd Qtr 2006 in $ millions Net Sales $176 up 2% Operating EBITDA $55 up 162% Revitalization still on track Lower volumes on reduced tow sales to China offset by higher pricing Received $21 million dividends from China affiliate Performance Products 2nd Qtr 2006 in $ millions Net Sales $48 up 2% Operating EBITDA $21 up 17% Stable earnings on continued strong sweetener demand Pricing declines consistent with strategy of sales to large-volume customers Attractive, cash generating businesses 9
  • 10. Significant Contribution from Equity and Cost Investments • FY 2005: Income impact of $150 million • FY 2006 guidance: income impact similar to 2005 Income Statement Cash Flow 60 60 50 50 14 40 40 39 39 30 30 7 14 20 7 20 36 7 7 21 10 10 18 19 17 15 12 10 0 0 1Q 2005 2Q 2005 1Q 2006 2Q 2006 1Q 2005 2Q 2005 1Q 2006 2Q 2006 Dividends - Cost Investments Dividends - Cost Investments Earnings - Equity Investments Dividends - Equity Investments 10
  • 11. Hidden Value through Equity Affiliates Cash and Proportional EBITDA of Equity Affiliates in $ millions 160 140 Not included in 120 Operating EBITDA Proportional EBITDA 100 Total proportional above Earnings EBITDA from 80 (Hidden Value) Equity Affiliates 60 Included in 40 Operating EBITDA Net Earnings 20 Equity Affiliates 0 2003 2004 2005 2006 2007 Total proportional EBITDA not properly reflected 1111
  • 12. Capitalization (in $millions) Dec 31, June 30, Mar 31, 2005 2006 2006 312 390 354 Cash 1,712 1,708 1,718 Senior Credit Term Loan - - - Senior Credit Revolver - - - Floating Rate Term Loan 1,712 1,708 1,718 Total Senior Debt 800 800 800 Senior Sub Notes ($) 157 153 165 Senior Sub Notes (€*) 460 397 412 Other Debt 3,129 3,058 3,095 Total Cash Pay Debt 75 73 77 Discount Notes Series A 314 306 322 Discount Notes Series B 3,518 3,437 3,494 Total Debt 308 235 418 Shareholders' Equity 3,826 3,672 3,912 Total Capitalization 3,206 3,047 3,140 Net Debt(Total Debt Less Cash) 12 * Translated at 1.2713 - effective date June 30, 2006
  • 13. 2006 Business Outlook Favorable industry dynamics Chemical Products Continued strong global demand 2006 Adjusted Increasing penetration in key customer EPS Guidance segments $2.50 to $2.80 Ticona Improved global demand Positive impact of COC sale • Strong performance Improving earnings with progress on from operations Acetate restructuring • Acid expansions to Products On path to improved profitability levels be absorbed throughout the year Strong performance on demand growth Performance Moving toward specialty-chemical Products performance seasonally stronger 1st half 13
  • 14. 2006 Guidance Adjusted EPS: $2.50 to $2.80 Depreciation/Amortization • $275 - $300 million Cash Interest Expense • $230 - $250 million Tax Rate • 28% Capital Expenditures • $200 - $250 million CE Equity • 158.6 million shares common stock outstanding • 1.5 million stock option grants* • 12 million shares convertible preferred * Based on total of 11 million stock option grants valued using the Treasury Method as of June 30, 2006. 14
  • 15. Appendix 15 15
  • 16. Reg G: Reconciliation of Diluted Adjusted EPS Table 6 Adjusted Earnings Per Share - Reconciliation of a Non-U.S. GAAP Measure Three Months Ended Six Months Ended June 30, June 30, (in $ millions, except per share data) 2006 2005 2006 2005 Earnings from continuing operations 123 136 before tax and minority interests 146 307 Non-GAAP Adjustments: Special charges and other adjustments * 13 61 25 35 Refinancing costs - 102 - - Adjusted earnings from continuing operations 136 299 before tax and minority interests 171 342 Income tax provision on adjusted earnings ** (33) (74) (48) (96) Minority interests (13) (38) (1) (1) Earnings from discontinued operations, net of tax - 10 - 1 Preferred dividends (2) (4) (2) (5) 88 193 Adjusted net earnings available to common shareholders 120 241 Add back: Preferred dividends 2 4 2 5 Adjusted net earnings for diluted adjusted EPS 122 90 246 197 Diluted shares (millions) Weighted average shares outstanding 158.5 150.2 158.6 158.6 Assumed conversion of Preferred Shares 12.0 12.0 12.0 12.0 Assumed conversion of stock options - 0.1 1.5 1.4 Total diluted shares 170.5 162.3 172.1 172.0 Adjusted EPS from continuing operations 0.71 0.53 1.42 1.15 Earnings per common share from discontinued operations 0.06 - - 0.01 Adjusted EPS 0.71 0.53 1.43 1.21 * See Table 7 fo r details ** The U.S. GA A P tax rate fo r the three and six mo nths ended June 30, 2006 is 29%. The co mpany is using the 28% rate reflective o f the o riginal guidance in Q12006. 16
  • 17. Reg G: Reconciliation of Net Debt Table 5 Net Debt - Reconcilation of a Non-U.S. GAAP Measure June 30, December 31, (in $ millions) 2006 2005 Short-term borrowings and current installments of long-term debt - third party and affiliates 155 174 Plus: Long-term debt 3,282 3,320 Total debt 3,494 3,437 Less: Cash and cash equivalents 390 354 Net Debt 3,140 3,047 17
  • 18. Reg G: Reconciliation of Special Charges Table 7 Reconciliation of Special Charges to Total Special Charges and Other Adjustments Special Charges: Three Months Ended Six Months Ended June 30, June 30, (in $ millions) 2006 2005 2006 2005 Employee termination benefits 6 8 9 11 Plant/office closures 1 2 2 - 7 10 Total restructuring 11 11 Asset impairments 24 24 - - Insurance recoveries associated with plumbing cases (4) (4) (2) (3) Other 35 * 3 - 4 Total 12 27 12 65 Other Adjustments: ** Three Months Ended Six Months Ended June 30, June 30, (in $ millions) 2006 2005 2006 2005 Executive severance & legal costs related to Squeeze-Out - - 13 23 Favorable impact on non-operating foreign exchange position (14) (14) - - Advisor monitoring fee - 10 - - 13 23 Total (14) (4) 25 13 35 61 Total special charges and other adjustments * Termination of advisor monitoring fee ** These items are included in net earnings (loss) but not included in special charges. 18
  • 19. Table 1 Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA - a Non-U.S. GAAP Measure. * Three Months Ended Six Months Ended June 30, June 30, (in $ millions) 2006 2005 2006 2005 Net Sales Chemical Products 1,085 2,129 1,194 2,363 Technical Polymers Ticona 223 462 230 461 Acetate Products 172 337 176 343 Performance Products 47 94 48 97 Other Activities 8 20 68 129 Intersegment eliminations (29) (58) (42) (67) Total 1,674 1,506 3,326 2,984 Operating Profit (Loss) Chemical Products 155 332 141 303 Technical Polymers Ticona 5 44 38 79 Acetate Products 10 20 29 52 Performance Products 15 28 16 33 Other Activities (33) (116) (61) (107) Total 163 152 360 308 Equity Earnings and Other Income/(Expense) ** Chemical Products (6) 8 16 25 Technical Polymers Ticona 16 28 15 29 Acetate Products 2 2 21 21 Performance Products - - 1 1 Other Activities (6) 18 (2) 10 Total 47 30 74 48 Special Charges and Other Adjustments *** Chemical Products 3 4 8 7 Technical Polymers Ticona 20 21 (2) (4) Acetate Products - 1 - - Performance Products - - - - Other Activities (10) 35 19 32 Total 25 13 35 61 Depreciation and Amortization Expense Chemical Products 39 73 41 79 Technical Polymers Ticona 14 29 16 32 Acetate Products 9 18 5 12 Performance Products 3 6 4 8 Other Activities 2 4 7 12 Total 73 67 143 130 Reg G: Reconciliation of Operating EBITDA Operating EBITDA Chemical Products 191 417 206 414 Technical Polymers Ticona 55 122 67 136 Acetate Products 21 41 55 85 Performance Products 18 34 21 42 Other Activities (23) (41) (65) (67) Total 308 262 612 547 * Other Activities primarily includes corporate selling, general and administrative expenses and the results from AT Plastics and captive insurance companies. ** Includes equity earnings from affiliates and other income/(expense), which is primarily dividends from cost investments. *** Excludes adjustments to minority interest, net interest, taxes, depreciation and amortization. 19
  • 20. 2005 Operating EBITDA by Segment in $ millions 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year Chemical Products 226 191 198 197 812 Technical Polymers 67 55 50 32 204 Ticona Acetate Products 20 21 17 28 86 Performance 16 18 17 13 64 Products Other Activities (44) (24) (32) (13) (113) Total 285 261 250 257 1,053 20
  • 21. Q1 2006 Q1 2005 Q2 2005 Q3 2005 Q4 2005 FY 2005 Net Sales Chemical Products 1,044 1,085 1,100 1,107 4,336 Technical Polymers Ticona 239 223 212 213 887 Acetate Products 165 172 162 160 659 Performance Products 47 47 46 40 180 Other Activities 12 8 55 69 144 Intersegment eliminations (29) (29) (40) (38) (136) 1652 1,478 1,506 1,535 1,551 6,070 Operating Profit (Loss) Chemical Products 177 155 98 143 573 Technical Polymers Ticona 39 5 18 (2) 60 Acetate Products 10 10 5 42 67 Performance Products 13 15 13 10 51 Other Activities (83) (33) (41) (33) (190) 197 156 152 93 160 561 Equity Earnings and Other Income/(Expense) ** Chemical Products 14 (6) 36 36 80 Technical Polymers Ticona 12 16 15 10 53 Acetate Products - 2 - 2 4 Performance Products - - (1) - (1) Other Activities (8) 17 (3) 7 13 165 18 29 47 55 149 Special Charges and Other Adjustments *** Chemical Products 1 3 19 (31) (8) Technical Polymers Ticona 1 20 4 6 31 Acetate Products 1 - 9 (24) (14) Performance Products - - 1 - 1 Other Activities 45 (10) 7 5 47 10 48 13 40 (44) 57 Depreciation and Amortization Expense Chemical Products 34 39 45 49 167 Technical Polymers Ticona 15 14 13 18 60 Acetate Products 9 9 3 8 29 Performance Products 3 3 4 3 13 2 2 5 17 Other Activities 8 70 63 67 70 86 286 Operating EBITDA Reg G: Reconciliation of 2005 Operating EBITDA Chemical Products 226 191 198 197 812 Technical Polymers Ticona 67 55 50 32 204 Acetate Products 20 21 17 28 86 Performance Products 16 18 17 13 64 Other Activities (44) (24) (32) (13) (113) 304 285 261 250 257 1,053 21