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    celanese q3_earnings_presentation celanese q3_earnings_presentation Presentation Transcript

    • Celanese 3Q 2007 Earnings Conference Call / Webcast Tuesday, October 23, 2007 10:00 a.m. ET Dave Weidman, Chairman and CEO Steven Sterin, Senior Vice President and CFO 1
    • Forward Looking Statements, Reconciliation and Use of Non- GAAP Measures to U.S. GAAP Forward-Looking Statements This presentation 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 presentation, 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 presentation. 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. Reconciliation of Non-U.S. GAAP Measures to U.S. GAAP This presentation reflects five performance measures, operating EBITDA, affiliate EBITDA, adjusted earnings per share, net debt, and free cash flow, 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; for net debt is total debt and for free cash flow is cash flow from operations.. 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 other charges and adjustments. We provide guidance on operating EBITDA and are unable to reconcile forecasted operating EBITDA to a GAAP financial measure because a forecast of Other Charges and Adjustments is not practical. 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. § Affiliate EBITDA, a measure used by management to measure performance of its equity investments, is defined as the proportional operating profit plus the proportional depreciation and amortization of its equity investments. Affiliate EBITDA, including Celanese Proportional Share of affiliate information on Table 8, is not a recognized term under U.S. GAAP and is not meant to be an alternative to operating cash flow of the equity investments. The company has determined that it does not have sufficient ownership for operating control of these investments to consider their results on a consolidated basis. The company believes that investors should consider affiliate EBITDA when determining the equity investments’ overall value in the company. § 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 other charges and adjustments, and divided by the number of basic common shares, diluted preferred shares, and options valued using the treasury method. We provide guidance on an adjusted earnings per share basis and are unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure because a forecast of Other Items is not practical. 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. § Free cash flow is defined as cash flow from operations excluding operating cash used in discontinued operations less capital expenditures and further adjusted for other charges and adjustments. 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 cash flow. Our management and credit analysts use free cash flow to evaluate the company’s liquidity and assess credit quality. This non-U.S. GAAP information 2 is not intended to be considered in isolation or as a substitute for U.S. GAAP financial statements.
    • Celanese resegmentation: Realigning the businesses to accelerate growth Differentiated Intermediates Specialty Products Building Block Advanced Engineered Engineered Formaldehyde Plastics Materials (AEM) Raw Acetate Consumer Materials Anhydride and Specialties esters (CS) Nutrinova Acetic Acid Industrial Emulsions/PVOH Specialties VAM (IS) AT Plastics Acetyl Intermediates 3
    • Dave Weidman Chairman and Chief Executive Officer 4
    • Celanese Corporation Q3 2007 Highlights 3rd Qtr 2007 3rd Qtr 2006 in millions (except EPS) Net Sales $1,573 $1,471 Operating Profit $147 $172 Adjusted EPS $0.73 $0.71 Operating EBITDA $302 $296 Note: All figures exclude results of the divested Oxo Alcohol business. The results of the discontinued Edmonton Methanol business have only been excluded from Net Sales and Operating Profit. 5
    • 2007 Business Outlook Continue >2x GDP volume growth ► Advanced across transportation and non- Engineered transportation end-uses Materials Continuing high raw material costs ► Improved earnings continue from ► 2007 Guidance: revitalization efforts Consumer Adjusted EPS Integration of APL acquisition ► Specialties $3.10 to $3.20 Strong underlying business ► fundamentals Operating EBITDA Continued challenge with high raw $1,240 to $1,270 MM ► material costs Industrial Forecasted 2007 tax Specialties Force majeure impact expected to ► rate of 28% conclude in fourth quarter Continued strong global demand ► Favorable pricing continues into Q4 ► Acetyl ~($0.07)/share Q4Y/Y headwind ► Intermediates associated with Edmonton methanol exit 6
    • Celanese continues to execute its growth strategy Primary Growth Focus Balance Operational EBITDA Group Asia Revitalization Innovation Organic Sheet Excellence Impact Advanced Operating EBITDA X X X X Engineered > $100MM Materials Consumer and X X X X Industrial > $100MM Specialties Acetyl X X X > $100MM Intermediates EPS Celanese Incremental X X EPS Corporate $300 – $350 million increased EBITDA profile plus EPS potential by 2010 7
    • Steven Sterin Senior Vice President and CFO 8
    • Celanese Corporation Financial Highlights Net sales increased 7% from the ► 3rd Qtr 3rd Qtr in millions (except EPS) 2007 2006 prior year Continued strong global ► demand for Acetyl Net Sales $1,573 $1,471 Intermediates Operating Profit $147 $172 ► Double digit volume growth in Advanced Engineered Net Earnings $128 $109 Materials ► Higher pricing in Consumer Special Items Specialties Other Charges/Adjustments $40 $16 Operating profit decreased 15% ► driven primarily by increased Adjusted EPS $0.73 $0.71 other charges and a loss on sale related to the AT Plastics Films Effective Tax Rate 28% 25% business Diluted Share Basis 167.4 171.2 Adjusted EPS up to $0.73/share ► Operating EBITDA $302 $296 Operating EBITDA increased to ► $302 9
    • Advanced Engineered Materials 3rd Qtr 2007 3rd Qtr 2006 in millions Net Sales $258 up 12% $230 Operating EBITDA $70 up 4% $67 Third Quarter 2007: ► Net sales increase driven by strong volume growth (11%) and currency effect (4%) offset by pricing declines related to product and application mix ► Volume growth partially offset by mix effect and higher energy costs ► Increased earnings from equity affiliates contributed to Operating EBITDA improvement 10
    • Consumer Specialties 3rd Qtr 2007 3rd Qtr 2006 in millions Net Sales $282 up 32% $213 Operating EBITDA $53 up 20% $44 Third Quarter 2007: ► Increased revenues primarily attributable to $59 million of additional net sales from APL and higher pricing on continued strong global demand for Acetate Products ► Continued volume growth in Sunett® partially offset lower overall pricing for the sweetener ► Increased volumes, higher overall pricing and realized benefits from the revitalization efforts helped to offset increased raw material and energy costs 11
    • Industrial Specialties 3rd Qtr 2007 3rd Qtr 2006 in millions Net Sales $314 down 6% $335 Operating EBITDA $18 down 50% $36 Third Quarter 2007: ► Net sales decrease primarily driven by lower volumes resulting from the unplanned outage at the Clear Lake facility and the subsequent force majeure ► Higher pricing and favorable currency impacts could not offset the significantly lower volumes and higher raw material costs 12
    • Acetyl Intermediates 3rd Qtr 2007 3rd Qtr 2006 in millions Net Sales $859 down 1% $872 Operating EBITDA $178 up 1% $177 Third Quarter 2007: ► Higher pricing, favorable currency effects and production from the new Nanjing unit positively impacted results ► Challenged with reduced volumes resulting from the unplanned outage at the Clear Lake facility ► Favorable supply/demand balances as a result of unplanned outages at key competitors continued to drive increased pricing in the industry ► Operating EBITDA includes increased dividends from the Ibn Sina cost affiliate 13
    • Strong performance continues for Equity and Cost Investments • Q3 2007: Earnings impact higher than cash flows primarily due to increased earnings in the equity affiliates of Advanced Engineered Materials • Updated FY 2007 Income Guidance: Income significantly above 2006 full-year performance of ~$154 million • Full-year 2007 Cash Flow guidance: Cash flow approximates income statement impact Income Statement Cash Flow 200 200 160 160 $ millions $ millions 120 120 93 93 62 80 62 80 40 40 29 29 54 53 16 65 53 16 17 14 24 0 17 0 Q3 2006 Q3 2007 YTD 2006 YTD 2007 Q3 2006 Q3 2007 YTD 2006 YTD 2007 Dividends - Cost Investments Dividends - Cost Investments Dividends - Equity Investments Earnings - Equity Investments Note: All figures exclude results of the divested Oxo Alcohol business. 14
    • Continued strong cash generation Cash Flow from Operations Year over Year Comparison YTD 2007 YTD 2006 ($ in millions) Net cash provided by operating activities $279 $444 Operating cash used in discontinued operations $92 ($7) Net cash provided by operating activities from continuing operations $371 $437 Less: Capital expenditures $217 $171 Add: Other charges and other adjustments1 $90 ($10) Free Cash Flow – Adjusted $244 $256 Factors contributing to strong cash generation during 2007: ► Strong operating performance despite unplanned outage at Clear Lake Facility ► Continued commitment and increased investment in Asia ► 2007 YTD cash flows from operations included ~$109 million in additional cash taxes 1 Amounts primarily associated with the long-term management compensation plan payment in 2007 and the cash impacts from the Edmonton methanol production in both 15 2007 and 2006.
    • Appendix 16
    • Reg G: Reconciliation of Adjusted EPS Adjusted Earnings Per Share - Reconciliation of a Non-U.S. GAAP Measure Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (in $ millions, except per share data) Earnings (loss) from continuing operations 150 401 before tax and minority interests 131 134 Non-GAAP Adjustments: 1 Other charges and other adjustments 16 77 40 206 - - Refinancing costs 254 Adjusted earnings from continuing operations before tax and minority interests 171 166 594 478 2 Income tax provision on adjusted earnings (42) (129) (48) (166) (2) Minority interests - - (3) Adjusted earnings from continuing operations 123 122 428 346 Preferred dividends (2) (3) (7) (8) Adjusted net earnings available to common shareholders 121 119 421 338 Add back: Preferred dividends 2 3 7 8 Adjusted net earnings for adjusted EPS 123 122 428 346 Diluted shares (millions) Weighted average shares outstanding 158.6 158.6 150.2 155.4 12.0 12.0 Assumed conversion of Preferred Shares 12.0 12.0 - Assumed conversion of Restricted Stock - 0.3 0.4 0.6 1.0 4.4 Assumed conversion of stock options 4.8 Total diluted shares 171.2 171.6 167.4 172.1 Adjusted EPS 0.73 0.71 2.49 2.02 1 See Table 7 for details 2 The adjusted tax rate for the three and nine months ended September 30, 2007 is 28% based on the original full year 2007 guidance. 17
    • Reg G: Reconciliation of Net Debt Net Debt - Reconciliation of a Non-U.S. GAAP Measure September 30, December 31, 2007 2006 (in $ millions) Short-term borrowings and current installments of long-term debt - third party and affiliates 243 309 Long-term debt 3,252 3,189 Total debt 3,495 3,498 Less: Cash and cash equivalents 531 791 Net Debt 2,964 2,707 18
    • Reg G: Other Charges and Other Adjustments Other Charges and Other Adjustments Other Charges: Three Months Ended Nine Months Ended September 30, September 30, (in $ millions) 2007 2006 2007 2006 2 27 Employee termination benefits - 11 4 - Plant/office closures 4 - (2) (2) Insurance recoveries associated with plumbing cases - (3) Long-term compensation triggered by Exit Event - - 74 - 6 9 Asset impairments - - Ticona Kelsterbach relocation 1 - 4 - - 1 2 Other 4 Total 12 - 118 12 Other Adjustments: 1 Three Months Ended Nine Months Ended September 30, September 30, (in $ millions) 2007 2006 2007 2006 Executive severance & other costs related (1) - to Squeeze-Out 5 28 - 10 Ethylene Pipeline Exit - 5 10 Business Optimization 4 4 13 22 Foreign exchange loss related to refinancing transaction - - 7 7 AT Plastics films sale - - 2 Discontinued Methanol production - 10 31 36 4 8 Other (3) (3) 28 16 88 65 Total 40 16 206 77 Total other charges and other adjustments 1 These items are included in net earnings but not included in other charges. 2 Adjusted earnings per share included earnings from its discontinued methanol production which was included in the company's 2007 guidance. 19
    • 20 Segment Data and Reconciliation of Operating Profit (Loss) to Operating EBITDA - a Non-U.S. GAAP Measure. Three Months Ended Nine Months Ended September 30, September 30, (in $ millions) 2007 2006 2007 2006 Net Sales 258 777 Advanced Engineered Materials 230 691 282 832 Consumer Specialties 213 652 314 1,015 Industrial Specialties 335 972 859 2,532 Acetyl Intermediates 872 2,520 Other Activities 1 6 2 5 16 (146) (474) Intersegment eliminations (184) (503) Total 1,573 1,471 4,684 4,348 Operating Profit (Loss) 35 103 Advanced Engineered Materials 37 116 34 130 Consumer Specialties 35 124 (9) 2 Industrial Specialties 17 35 117 340 Acetyl Intermediates 126 349 Other Activities 1 (30) (151) (43) (144) Total 147 172 424 480 Equity Earnings and Other Income/(Expense) 2 18 48 Advanced Engineered Materials 14 42 2 37 Consumer Specialties - 22 - - Industrial Specialties - (1) 28 51 Acetyl Intermediates 18 40 Other Activities 1 (10) (8) 10 10 Total 38 42 128 113 Other Charges and Other Adjustments 3 - 5 Advanced Engineered Materials - (4) 2 11 Consumer Specialties - - 14 33 Industrial Specialties 3 14 2 59 Acetyl Intermediates 10 36 1 Other Activities 22 98 3 31 Total 40 16 206 77 Depreciation and Amortization Expense 17 51 Advanced Engineered Materials 16 48 15 39 Consumer Specialties 9 29 13 43 Industrial Specialties 16 45 31 81 Acetyl Intermediates 23 78 1 4 Other Activities 1 2 5 Total 77 66 218 205 Operating EBITDA Reg G: Reconciliation of Operating EBITDA 70 207 Advanced Engineered Materials 67 202 53 217 Consumer Specialties 44 175 18 78 Industrial Specialties 36 93 178 531 Acetyl Intermediates 177 503 1 Other Activities (17) (57) (28) (98) Total 302 296 976 875 1 Other Activities primarily includes corporate selling, general and administrative expenses and the results from captive insurance companies. 2 Includes equity earnings from affiliates, dividends from cost investments and other income/(expense) 3 Excludes adjustments to minority interest, net interest, taxes, depreciation, amortization and discontinued operations (See Table 7).