Celanese Corporation Reports Full Year 2016 and Fourth Quarter Earnings; Maintains Growth Outlook for 2017

DALLAS--()--Celanese Corporation (NYSE: CE), a global technology and specialty materials company, today reported 2016 GAAP diluted earnings per share of $6.19 and adjusted earnings per share of $6.61. The company also reported fourth quarter 2016 GAAP diluted earnings per share of $1.12 and adjusted earnings per share of $1.52. Robust operating models in both Materials Solutions and the Acetyl Chain contributed to superior performance this year. Advanced Engineered Materials delivered strong results by expanding the opportunity pipeline which combines one of the broadest polymer portfolios with exceptional application expertise to develop customer specific solutions. Earlier today, Celanese announced an agreement to acquire Nilit Plastics' nylon compounding division, which will further enhance both the polymer portfolio and ability to service customers more comprehensively. The Acetyl Chain delivered differentiated results by leveraging its technology advantage, integrated network and global presence to sustain profitability in a slow growth environment.

Fourth Quarter and Full Year 2016 Highlights:

    Three Months Ended
December 31,
      Year Ended
December 31,
2016     2015 2016     2015
(unaudited)
(In $ millions, except per share data)
Operating Profit (Loss)
Advanced Engineered Materials 87 51 350 235
Consumer Specialties   76     46     302     262  
Total Materials Solutions   163     97     652     497  
Industrial Specialties 20 (4 ) 105 72
Acetyl Intermediates 66 (242 ) 340 (3 )
Eliminations           1      
Total Acetyl Chain   86     (246 )   446     69  
Other Activities   (132 )   (156 )  

(205

)

 

 

(240

)

Total   117     (305 )   893     326  
 
 
Three Months Ended
December 31,
Year Ended
December 31,
2016 2015 2016 2015
(unaudited)
(In $ millions, except per share data)
Net earnings (loss) 161 (301 ) 906 285
 
Adjusted EBIT(1)(2)
Advanced Engineered Materials 121 85 479 397
Consumer Specialties   106     109     418     411  
Total Materials Solutions   227     194     897     808  
Industrial Specialties 18 22 106 110
Acetyl Intermediates 68 60 347 388
Eliminations           1      
Total Acetyl Chain   86     82     454     498  
Other Activities   (24 )   (20 )   (73 )   (70 )
Total   289     256     1,278     1,236  
 
Equity Earnings, Cost-Dividend Income, Other Income (Expense)
Advanced Engineered Materials 31 33 122 151
Consumer Specialties   27     27     110     108  
Total Materials Solutions   58     60     232     259  
 
Operating EBITDA(1) 360 332 1,566 1,515
Diluted EPS - continuing operations $ 1.12 $ (2.03 ) $ 6.19 $ 2.01
Diluted EPS - total $ 1.12 $ (2.03 ) $ 6.18 $ 2.00
Adjusted EPS(1) $ 1.52 $ 1.25 $ 6.61 $ 6.02
 
Net cash provided by (used in) investing activities (247 ) (97 ) (439 ) (558 )
Net cash provided by (used in) financing activities (292 ) (2 ) (759 ) (66 )
Net cash provided by (used in) operating activities (47 ) 136 893 862
Free cash flow(1) (116 ) 74 623 556
______________________________
(1)   See "Non-US GAAP Financial Measures" below.
(2) The company's discussion of adjusted earnings includes use of terms such as "segment income" and "core income". Those non-GAAP terms are defined below and reconciled in our Non-US GAAP Financial Measures and Supplemental Information document below.
 

"I am pleased to report second highest GAAP earnings per share and highest ever adjusted earnings per share for the year. We had tremendous success in offsetting typical fourth quarter seasonality and muted demand growth to deliver outstanding results," said Mark Rohr, chairman and chief executive officer. "Our Materials Solutions core contributed significantly to growth by leveraging our broad and differentiated polymer portfolio and commercializing unique solutions for customers across applications. To further advance the momentum in engineered materials (Advanced Engineered Materials excluding affiliates), we announced an agreement to acquire Nilit Plastics' nylon compounding division which has a comprehensive product portfolio and state-of-the-art production facilities. The Acetyl Chain continued to press through low global utilization rates and a weak demand landscape by leaning on the integrated global footprint and expanded commercial flexibility. Strong business performance resulted in another quarter of robust cash generation that supported $200 million of share buy backs in the quarter for a total of $500 million for the year. In 2016, we increased dividends per share by 20 percent year over year and returned $201 million in dividends for the year. The success of our business models in both cores combined with the rigor of our productivity programs has enabled us to continue delivering strong and sustainable cash flow," said Rohr.

Full Year Business Segment Overview

Materials Solutions

Materials Solutions delivered its second highest GAAP operating profit of $652 million and highest-ever adjusted EBIT of $897 million for the year. The core demonstrated strong growth over the prior year as volume growth and productivity initiatives more than offset the decline in tow pricing and lower contributions from affiliates. Advanced Engineered Materials had its strongest year ever driven primarily by the success of our opportunity pipeline which supported strong volume growth year over year. In 2016, the number of projects launched exceeded targets, commercializing about 1,385 value-enhancing projects. These projects spanned across industries and product lines and were supported by deep understanding of customer needs. Recent acquisitions provide further opportunity to translate and extend the success of this model. Volume in Advanced Engineered Materials increased year-over-year, led by growth in Asia, but spread across the product portfolio.

Equity earnings from Advanced Engineered Materials affiliates declined $28 million year over year primarily driven by lower MTBE pricing in Ibn Sina partially offset by growth in earnings from Korea Engineering Plastics and Polyplastics.

Tow pricing was 8 percent lower in 2016 versus the prior year primarily due to a lower industry utilization rate outside of China but was more than offset by higher volumes and productivity gains. Volume increased compared to last year as the tow industry recovered from destocking in 2015.

Acetyl Chain

The Acetyl Chain leveraged its position as a global leader across the value chain and its commercial agility to persevere in a low utilization and deflationary raw materials environment. Pricing for acetyl products was lower in 2016 versus the prior year primarily due to lower methanol pricing for most of the year which offset productivity improvements. The core grew margin despite pricing pressure and softer demand by effectively leveraging low-cost facilities in the U.S. Gulf Coast and Singapore. In 2016, the newest vinyl acetate ethylene (VAE) production unit on Jurong Island, Singapore, came on-line to support growing demand for ecologically friendly materials in Southeast Asia.

Recent Highlights

  • Signed a definitive agreement to acquire the nylon compounding division from Nilit Group, a major independent producer of high performance nylon resins, fibers and compounds. Celanese will acquire Nilit Plastics’ nylon compounding product portfolio, customer agreements and manufacturing, technology and commercial facilities.
  • On December 1, 2016, completed the transaction to acquire the Forli, Italy based SO.F.TER. Group, one of the world’s largest independent thermoplastic compounders. SO.F.TER. Group’s sophisticated and modern manufacturing facilities and product portfolio provide a vehicle for additional growth, investment and synergies.
  • Accelerated the launch of 389 projects in the fourth quarter, an all-time record, for a total of 1,385 new project commercializations in 2016 in Advanced Engineered Materials. The growing success of the opportunity pipeline demonstrates the efficiency and rigor of managing unique customer needs.
  • Earned top plastic and automotive industry recognition at the Society of Plastics Engineers' 46th Annual Automotive Division Innovation Awards Gala in Detroit, Michigan. Celanese won in two categories, Safety and Body Exterior, as the materials supplier for award-winning components of the all-new 2017 Ford Super Duty pickup.

Fourth Quarter Business Segment Overview

Materials Solutions

Materials Solutions delivered strong growth over last year primarily due to volume growth, lower raw material costs and productivity initiatives which more than offset lower pricing. Advanced Engineered Materials recorded its second highest fourth quarter GAAP operating profit of $87 million and record fourth quarter adjusted EBIT of $121 million. Profits grew significantly over the fourth quarter of 2015, overcoming normal seasonality. The opportunity pipeline drove broad-based growth by solving unmet customer needs and commercializing projects independent of seasonal trends. A record 389 projects were launched in the fourth quarter, successfully commercializing products across multiple industries and applications. Productivity combined with lower raw material costs more than offset mix-driven pricing decline in Advanced Engineered Materials. Volume grew versus the fourth quarter in 2015, primarily driven by growth in Asia.

Consumer Specialties maintained profitability year over year as productivity initiatives and lower raw material costs offset a 10 percent decline in tow pricing.

Acetyl Chain

The Acetyl Chain demonstrated the strength of its flexible commercial model by improving margins and growing profitability year over year despite muted demand and a sluggish raw material environment. Productivity gains and a reduction in raw material costs more than offset pricing pressure and volume decline. Increased optionality from a global asset base enabled reduction in costs throughout the chain as raw material dynamics evolved. VAM pricing in Asia was lower versus the same quarter last year due to low industry utilization, while global pricing in emulsion polymers was weaker primarily due to lower raw material costs, mainly VAM. Volume was lower in VAM in Europe and due to weak demand for EVA polymers in Asia.

Cash Flow

Operating cash flow was $893 million for the year. Free cash flow was $923 million before including $300 million of voluntary pension deleveraging in the US pension plan. Capex for the year was $246 million and $60 million for the quarter.

$701 million of cash was returned to shareholders, repurchasing 7.0 million shares for $500 million and distributing $201 million in dividends for the year. As of December 31, 2016, $531 million remains under the current share repurchase authorization.

Outlook

"In 2016, we successfully executed on our plans to deliver yet another year of strong growth despite several headwinds. We saw great success from our opportunity pipeline in Materials Solutions and managed with strength through a difficult operating environment in the Acetyl Chain. In 2017, we are starting to see early signs of recovery in the Chinese economy while Europe and the Americas remain stable. Advanced Engineered Materials should continue to unlock value by commercializing new projects and extending the pipeline model through our recent acquisitions. The prevailing uplift in the raw materials complex is encouraging and allows us to flex the acetyl value chain to expand margins globally. We believe that the agility of our business models in both the cores and our commitment to productivity will enable us to grow over the headwinds in tow and currency. At this time, we see a path to increasing adjusted earnings per share in the range of 8-11% in 2017, with a back-half loaded earnings profile due to major planned turnarounds in the first half," said Rohr.

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 prior to market open on February 1, 2017. 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 7,300 employees worldwide and had 2016 net sales of $5.4 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 February 1, 2017 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.

   
 

Consolidated Statements of Operations - Unaudited

 
Three Months Ended
December 31,
2016     2015
(In $ millions, except share and per share data)
Net sales 1,311 1,334
Cost of sales (989 ) (1,075 )
Gross profit 322 259
Selling, general and administrative expenses (184 ) (209 )
Amortization of intangible assets (2 ) (2 )
Research and development expenses (20 ) (21 )
Other (charges) gains, net 1 (332 )
Foreign exchange gain (loss), net (2 ) 1
Gain (loss) on disposition of businesses and asset, net 2   (1 )
Operating profit (loss) 117 (305 )
Equity in net earnings (loss) of affiliates 41 43
Interest expense (29 ) (33 )
Refinancing expense
Interest income 1
Dividend income - cost investments 26 27
Other income (expense), net   (2 )
Earnings (loss) from continuing operations before tax 156 (270 )
Income tax (provision) benefit 5   (31 )
Earnings (loss) from continuing operations 161   (301 )
Earnings (loss) from operation of discontinued operations
Gain (loss) on disposition of discontinued operations
Income tax (provision) benefit from discontinued operations    
Earnings (loss) from discontinued operations    
Net earnings (loss) 161 (301 )
Net (earnings) loss attributable to noncontrolling interests (1 ) 3  
Net earnings (loss) attributable to Celanese Corporation 160   (298 )
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations 160 (298 )
Earnings (loss) from discontinued operations    
Net earnings (loss) 160   (298 )
Earnings (loss) per common share - basic
Continuing operations 1.13 (2.03 )
Discontinued operations    
Net earnings (loss) - basic 1.13   (2.03 )
Earnings (loss) per common share - diluted
Continuing operations 1.12 (2.03 )
Discontinued operations    
Net earnings (loss) - diluted 1.12   (2.03 )
Weighted average shares (in millions)
Basic 141.9 146.9
Diluted 142.6 146.9
 
   

Consolidated Statements of Operations - Unaudited

 
Year Ended December 31,
2016     2015
(In $ millions, except share and per share data)
Net sales 5,389 5,674
Cost of sales (3,984 ) (4,356 )
Gross profit 1,405 1,318
Selling, general and administrative expenses (416 ) (506 )
Amortization of intangible assets (9 ) (11 )
Research and development expenses (78 ) (119 )
Other (charges) gains, net (11 ) (351 )
Foreign exchange gain (loss), net (1 ) 4
Gain (loss) on disposition of businesses and asset, net 3   (9 )
Operating profit (loss) 893 326
Equity in net earnings (loss) of affiliates 155 181
Interest expense (120 ) (119 )
Refinancing expense (6 )
Interest income 2 1
Dividend income - cost investments 108 107
Other income (expense), net (2 ) (8 )
Earnings (loss) from continuing operations before tax 1,030 488
Income tax (provision) benefit (122 ) (201 )
Earnings (loss) from continuing operations 908   287  
Earnings (loss) from operation of discontinued operations (3 ) (3 )
Gain (loss) on disposition of discontinued operations
Income tax (provision) benefit from discontinued operations 1   1  
Earnings (loss) from discontinued operations (2 ) (2 )
Net earnings (loss) 906 285
Net (earnings) loss attributable to noncontrolling interests (6 ) 19  
Net earnings (loss) attributable to Celanese Corporation 900   304  
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations 902 306
Earnings (loss) from discontinued operations (2 ) (2 )
Net earnings (loss) 900   304  
Earnings (loss) per common share - basic
Continuing operations 6.22 2.03
Discontinued operations (0.01 ) (0.01 )
Net earnings (loss) - basic 6.21   2.02  
Earnings (loss) per common share - diluted
Continuing operations 6.19 2.01
Discontinued operations (0.01 ) (0.01 )
Net earnings (loss) - diluted 6.18   2.00  
Weighted average shares (in millions)
Basic 144.9 150.8
Diluted 145.7 152.3
 
       

Consolidated Balance Sheets - Unaudited

 

As of
December 31,
2016

As of
December 31,
2015

(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents 638 967
Trade receivables - third party and affiliates, net 801 706
Non-trade receivables, net 223 285
Inventories 720 682
Deferred income taxes 68
Marketable securities, at fair value 30 30
Other assets 60   49  
Total current assets 2,472   2,787  
Investments in affiliates 852 838
Property, plant and equipment, net 3,577 3,609
Deferred income taxes 159 222
Other assets 307 300
Goodwill 796 705
Intangible assets, net 194   125  
Total assets 8,357   8,586  
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current installments of long-term debt - third party and affiliates 118 513
Trade payables - third party and affiliates 625 587
Other liabilities 322 330
Deferred income taxes 30
Income taxes payable 12   90  
Total current liabilities 1,077   1,550  
Long-term debt 2,890 2,468
Deferred income taxes 130 136
Uncertain tax positions 131 167
Benefit obligations 893 1,189
Other liabilities 215 247
Commitments and Contingencies
Stockholders' Equity
Preferred stock
Common stock
Treasury stock, at cost (1,531 ) (1,031 )
Additional paid-in capital 157 136
Retained earnings 4,320 3,621
Accumulated other comprehensive income (loss), net (358 ) (348 )
Total Celanese Corporation stockholders' equity 2,588 2,378
Noncontrolling interests 433   451  
Total equity 3,021   2,829  
Total liabilities and equity 8,357   8,586  
 

Non-US GAAP Financial Measures and Supplemental Information

February 1, 2017

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 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. 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:

  • 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.
  • Cash dividends received from our equity and cost 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. 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.

                                       
 
Table 1
Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Net earnings (loss) attributable to Celanese Corporation 900 160 262 221 257 304 (298 ) 161 205 236
(Earnings) loss from discontinued operations 2 3 (1 ) 2 2
Interest income (2 ) (1 ) (1 ) (1 ) (1 )
Interest expense 120 29 28 30 33 119 33 29 30 27
Refinancing expense 6 4 2
Income tax provision (benefit) 122 (5 ) 15 52 60 201 31 74 24 72

Certain Items attributable to Celanese Corporation (Table 8)

130   106   7 9 8   611   490   41 65   15
Adjusted EBIT 1,278 289 319 312 358 1,236 256 305 325 350
Depreciation and amortization expense(1) 288   71   71 73 73   279   76   70 66   67
Operating EBITDA 1,566   360   390 385 431   1,515   332   375 391   417
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Advanced Engineered Materials
Consumer Specialties 1 1 10 10
Industrial Specialties 28 18 10
Acetyl Intermediates 40 1 39
Other Activities(2) 1   1          
Accelerated depreciation and amortization expense 2 1 1 78 29 10 39
Depreciation and amortization expense(1) 288   71   71 73 73   279   76   70 66   67
Total depreciation and amortization expense 290   72   72 73 73   357   105   80 105   67
______________________________

(1)

  Excludes accelerated depreciation and amortization expense as detailed in the table above, which amounts are included in Certain Items above.

(2)

Other Activities includes corporate Selling, general and administrative ("SG&A") expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
                                       
 

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

 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions, except percentages)
Operating Profit (Loss) / Operating Margin
Materials Solutions 652     27.5 % 163     27.7 % 161     27.3 % 162     27.0 % 166     27.9 % 497     21.7 % 97     17.4 % 135     23.6 % 144     24.2 % 121     21.2 %
Acetyl Chain(1) 446 14.2 % 86 11.5 % 108 14.2 % 107 13.7 % 145 17.3 % 69 2.0 % (246 ) (30.3 )% 73 8.4 % 82 9.0 % 160 17.6 %
Other Activities(2) (205 ) (132 ) (23 ) (26 ) (24 ) (240 ) (156 ) (22 ) (38 ) (24 )
Total 893   16.6 % 117   8.9 % 246   18.6 % 243   18.0 % 287   20.4 % 326   5.7 % (305 ) (22.9 )% 186   13.2 % 188   12.7 % 257   17.7 %
Less: Net Earnings (Loss) Attributable to NCI(1) 6   1   1   2   2   (19 ) (3 ) (10 ) (4 ) (2 )
Operating Profit (Loss) Attributable to Celanese Corporation 887   16.5 % 116   8.8 % 245   18.5 % 241   17.8 % 285   20.3 % 345   6.1 % (302 ) (22.6 )% 196   13.9 % 192   13.0 % 259   17.9 %
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation
Advanced Engineered Materials 350 24.2 % 87 23.9 % 93 25.5 % 82 22.5 % 88 25.1 % 235 17.7 % 51 16.4 % 58 17.8 % 67 19.4 % 59 17.2 %
Consumer Specialties 302   32.5 % 76   33.8 % 68   30.2 % 80   34.0 % 78   32.0 % 262   27.0 % 46   18.7 % 77   31.2 % 77   30.9 % 62   27.3 %
Total Materials Solutions 652   27.5 % 163   27.7 % 161   27.3 % 162   27.0 % 166   27.9 % 497   21.7 % 97   17.4 % 135   23.6 % 144   24.2 % 121   21.2 %
Industrial Specialties 105 10.7 % 20 9.1 % 25 10.2 % 29 11.1 % 31 12.3 % 72 6.7 % (4 ) (1.7 )% 19 6.9 % 28 9.8 % 29 10.3 %
Acetyl Intermediates(1) 334 13.7 % 65 10.9 % 82 13.9 % 75 12.7 % 112 16.9 % 16 0.6 % (239 ) (37.1 )% 64 9.4 % 58 8.2 % 133 18.7 %
Eliminations 1       1              
Total Acetyl Chain 440   14.0 % 85   11.3 % 107   14.0 % 105   13.5 % 143   17.0 % 88   2.5 % (243 ) (29.9 )% 83   9.5 % 86   9.4 % 162   17.8 %
Other Activities(2) (205 ) (132 ) (23 ) (26 ) (24 ) (240 ) (156 ) (22 ) (38 ) (24 )
Total 887   16.5 % 116   8.8 % 245   18.5 % 241   17.8 % 285   20.3 % 345   6.1 % (302 ) (22.6 )% 196   13.9 % 192   13.0 % 259   17.9 %
Equity Earnings, Cost-Dividend Income, Other Income (Expense) Attributable to Celanese Corporation
Advanced Engineered Materials 122 31 33 27 31 151

(3)

33 44

 

31 43
Consumer Specialties 110   27   27   28   28   108   27   26   27   28  
Total Materials Solutions 232   58   60   55   59   259   60   70   58   71  
Industrial Specialties
Acetyl Intermediates 7   2   1   2   2   7   3   2   1   1  
Total Acetyl Chain 7   2   1   2   2   7   3   2   1   1  
Other Activities(2) 22   7   6   5   4   14   5   (4 ) 9   4  
Total 261   67   67   62   65   280   68   68   68   76  

Certain Items Attributable to Celanese Corporation (Table 8)

Advanced Engineered Materials 7 3 1 2 1 11 1 4 4 2
Consumer Specialties 6   3   3       41   36   2   1   2  
Total Materials Solutions 13   6   4   2   1   52   37   6   5   4  
Industrial Specialties 1 (2 ) 1 2 38 26 9 2 1
Acetyl Intermediates 6   1   1   3   1   365   296   18   48   3  
Total Acetyl Chain 7   (1 ) 1   4   3   403   322   27   50   4  
Other Activities(2) 110   101   2   3   4   156   131   8   10   7  
Total 130   106   7   9   8   611   490   41   65   15  
Adjusted EBIT / Adjusted EBIT Margin
Advanced Engineered Materials 479 33.2 % 121 33.2 % 127 34.8 % 111 30.4 % 120 34.3 % 397 29.9 % 85 27.3 % 106 32.5 % 102 29.5 % 104 30.3 %
Consumer Specialties 418   45.0 % 106   47.1 % 98   43.6 % 108   46.0 % 106   43.4 % 411   42.4 % 109   44.3 % 105   42.5 % 105   42.2 % 92   40.5 %
Total Materials Solutions 897   37.8 % 227   38.5 % 225   38.1 % 219   36.5 % 226   38.0 % 808   35.2 % 194   34.8 % 211   36.8 % 207   34.8 % 196   34.4 %
Industrial Specialties 106 10.8 % 18 8.2 % 25 10.2 % 30 11.5 % 33 13.0 % 110 10.2 % 22 9.2 % 28 10.2 % 30 10.5 % 30 10.6 %
Acetyl Intermediates 347 14.2 % 68 11.4 % 84 14.3 % 80 13.5 % 115 17.3 % 388 14.1 % 60 9.3 % 84 12.4 % 107 15.1 % 137 19.2 %
Eliminations 1       1              
Total Acetyl Chain 454   14.5 % 86   11.5 % 109   14.3 % 111   14.2 % 148   17.6 % 498   14.2 % 82   10.1 % 112   12.8 % 137   15.0 % 167   18.4 %
Other Activities(2) (73 ) (24 ) (15 ) (18 ) (16 ) (70 ) (20 ) (18 ) (19 ) (13 )
Total 1,278   23.7 % 289   22.0 % 319   24.1 % 312   23.1 % 358   25.5 % 1,236   21.8 % 256   19.2 % 305   21.6 % 325   22.0 % 350   24.1 %

___________________________

(1)

  Net earnings (loss) attributable to NCI is included within the Acetyl Intermediates segment.

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

(3)

Includes $150 million of Equity in net earnings (loss) of affiliates and $1 million of Other income.

                                       
 

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

 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions, except percentages)
Depreciation and Amortization Expense(1)
Advanced Engineered Materials 92     21     22     25     24     99     24     26     24     25    
Consumer Specialties 44   11   11   11   11   50   12   15   12   11  
Total Materials Solutions 136   32   33   36   35   149   36   41   36   36  
Industrial Specialties 34 9 9 8 8 36 7 10 9 10
Acetyl Intermediates 107   26   27   27   27   83   29   17   18   19  
Total Acetyl Chain 141   35   36   35   35   119   36   27   27   29  
Other Activities(2) 11   4   2   2   3   11   4   2   3   2  
Total 288   71   71   73   73   279   76   70   66   67  
Operating EBITDA / Operating EBITDA Margin
Advanced Engineered Materials 571 39.5 % 142 39.0 % 149 40.8 % 136 37.3 % 144 41.1 % 496 37.4 % 109 35.0 % 132 40.5 % 126 36.4 % 129 37.6 %
Consumer Specialties 462   49.7 % 117   52.0 % 109   48.4 % 119   50.6 % 117   48.0 % 461   47.6 % 121   49.2 % 120   48.6 % 117   47.0 % 103   45.4 %
Total Materials Solutions 1,033   43.5 % 259   44.0 % 258   43.7 % 255   42.5 % 261   43.9 % 957   41.7 % 230   41.3 % 252   44.0 % 243   40.8 % 232   40.7 %
Industrial Specialties 140 14.3 % 27 12.3 % 34 13.9 % 38 14.5 % 41 16.2 % 146 13.5 % 29 12.1 % 38 13.9 % 39 13.6 % 40 14.2 %
Acetyl Intermediates 454 18.6 % 94 15.7 % 111 18.8 % 107 18.1 % 142 21.4 % 471 17.2 % 89 13.8 % 101 14.9 % 125 17.7 % 156 21.9 %
Eliminations 1       1              
Total Acetyl Chain 595   19.0 % 121   16.2 % 145   19.0 % 146   18.7 % 183   21.8 % 617   17.6 % 118   14.5 % 139   15.9 % 164   18.0 % 196   21.6 %
Other Activities(2) (62 ) (20 ) (13 ) (16 ) (13 ) (59 ) (16 ) (16 ) (16 ) (11 )
Total 1,566   29.1 % 360   27.5 % 390   29.5 % 385   28.5 % 431   30.7 % 1,515   26.7 % 332   24.9 % 375   26.5 % 391   26.5 % 417   28.8 %
___________________________

(1)

  Excludes accelerated depreciation and amortization expense, which amounts are included in Certain Items above. See Table 1 for details.

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
                             
 
Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
 

per share

  per share   per share   per share   per share   per share   per share   per share   per share   per share
(In $ millions, except per share data)
Earnings (loss) from continuing operations attributable to Celanese Corporation 902 6.19 160 1.12 265 1.83 221 1.50 256 1.73 306 2.01 (298 ) (2.03 ) 161 1.07 207 1.34 236 1.53
Income tax provision (benefit) 122   (5 ) 15   52   60   201   31   74   24   72  
Earnings (loss) from continuing operations before tax 1,024 155 280 273 316 507 (267 ) 235 231 308

Certain Items attributable to Celanese Corporation (Table 8)

130 106 7 9 8 611 490 41 65 15
Refinancing and related expenses 6     4     2            
Adjusted earnings (loss) from continuing operations before tax 1,160 261 291 282 326 1,118 223 276 296 323
Income tax (provision) benefit on adjusted earnings(1) (197 ) (44 ) (49 ) (48 ) (55 ) (201 ) (40 ) (50 ) (53 ) (58 )
Adjusted earnings (loss) from continuing operations(2) 963   6.61 217   1.52 242   1.67 234   1.59 271   1.83 917   6.02 183   1.25   226   1.50 243   1.58 265   1.72
Diluted shares (in millions)(3)
Weighted average shares outstanding 144.9 141.9 144.0 146.5 147.4 150.8 146.9 149.8 153.5 153.2
Incremental shares attributable to equity awards 0.8   0.7   0.6   0.6   0.7   1.5     1.2   0.5   0.7  
Total diluted shares 145.7   142.6   144.6   147.1   148.1   152.3   146.9   151.0   154.0   153.9  

______________________________

(1) Calculated using adjusted effective tax rates (Table 3a) as follows:

 

 

2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In percentages)
Adjusted effective tax rate 17 17 17 17 17 18 18 18 18 18
 

(2) Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns.

 

Actual Plan
Asset Returns

Expected
Plan Asset
Returns

 

(In percentages)

 

Q4 '16 & 2016

6.9

7.3

 

 

 

Q4 '15 & 2015

(2.5

)

7.8

 

 

 

(3) Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive.

   
 
Table 3a
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
 
Actual
2016     2015
(In percentages)
US GAAP effective tax rate 12 41
Discrete quarterly recognition of GAAP items(1) 1 2
Tax impact of other charges and adjustments(2) 3 (15 )
Utilization of foreign tax credits(3) (2 )
Changes in valuation allowances, excluding impact of other charges and adjustments(4) 2 (5 )
Other(5) (1 ) (3 )
Adjusted tax rate 17   18  
______________________________

Note: As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate for actual results.

(1)

  Such as changes in uncertain tax positions, prior year audit adjustments, changes in tax laws and deferred taxes on outside basis differences.

(2)

Reflects the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes. During 2015, the Company recorded a $123 million long-lived impairment to fully write-off certain ethanol related assets at our facility in Nanjing, China and $174 million charge related to the termination of an existing agreement with a raw materials supplier in Singapore. For US GAAP purposes, these charges were incurred in jurisdictions for which valuation allowances are being recorded. These combined charges make up the majority of the 15% impact for 2015.

(3)

During 2012, the Company amended its tax returns and recognized $142 million in foreign tax credits for U.S. GAAP purposes. The Company reflects the benefits of these tax credits for adjusted tax rate purposes as they are utilized.

(4)

Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.

(5)

Tax impacts related to full-year forecasted tax opportunities and related costs.
                                       
 
Table 4
Net Sales by Segment - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Advanced Engineered Materials 1,444 364 365 365 350 1,326 311 326 346 343
Consumer Specialties 929   225   225   235   244   969   246   247   249   227  
Total Materials Solutions 2,373   589   590   600   594   2,295   557   573   595   570  
Industrial Specialties 979 219 245 262 253 1,082 239 274 287 282
Acetyl Intermediates 2,441 597 589 592 663 2,744 644 680 707 713
Eliminations(1) (288 ) (67 ) (71 ) (74 ) (76 ) (323 ) (71 ) (82 ) (83 ) (87 )
Total Acetyl Chain 3,132   749   763   780   840   3,503   812   872   911   908  
Other Activities(2)
Intersegment eliminations(1) (116 ) (27 ) (30 ) (29 ) (30 ) (124 ) (35 ) (32 ) (29 ) (28 )
Net sales 5,389   1,311   1,323   1,351   1,404   5,674   1,334   1,413   1,477   1,450  

______________________________

(1) Includes intersegment sales as follows:

 

 

2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Industrial Specialties (3 ) (1 ) (1 ) (1 )
Acetyl Intermediates (401 ) (93 ) (100 ) (102 ) (106 ) (447 ) (106 ) (114 ) (112 ) (115 )
Intersegment eliminations (404 ) (94 ) (101 ) (103 ) (106 ) (447 ) (106 ) (114 ) (112 ) (115 )
 

(2) Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

                   
 
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited
 
Three Months Ended December 31, 2016 Compared to Three Months Ended September 30, 2016
 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 1 (1 )
Consumer Specialties 2 (2 )
Total Materials Solutions 2 (1 ) (1 )
 
Industrial Specialties (7 ) (2 ) (2 ) (11 )
Acetyl Intermediates 2 (1 ) 1
Total Acetyl Chain (2 ) 1 (2 ) 1 (2 )
 
Total Company (1 ) 1 (1 ) (1 )
                   
 

Three Months Ended September 30, 2016 Compared to Three Months Ended June 30, 2016

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (1 ) 1
Consumer Specialties (4 ) (4 )
Total Materials Solutions (2 ) (2 )
 
Industrial Specialties (6 ) (1 ) (7 )
Acetyl Intermediates
Total Acetyl Chain (2 ) (1 ) 1 (2 )
 
Total Company (2 ) (2 )
                   
 

Three Months Ended June 30, 2016 Compared to Three Months Ended March 31, 2016

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 6 (2 ) 1 5
Consumer Specialties (3 ) (1 ) (4 )
Total Materials Solutions 2 (2 ) 1 1
 
Industrial Specialties 4 (1 ) 1 4
Acetyl Intermediates (11 ) (11 )
Total Acetyl Chain (7 ) (1 ) 1 (7 )
 
Total Company (4 ) (1 ) 1 (4 )
                   
 

Three Months Ended March 31, 2016 Compared to Three Months Ended December 31, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 12 12
Consumer Specialties 6 (7 ) (1 )
Total Materials Solutions 10 (3 ) 7
 
Industrial Specialties 9 (3 ) 6
Acetyl Intermediates 7 (4 ) 3
Total Acetyl Chain 8 (4 ) (1 ) 3
 
Total Company 9 (4 ) 5
                   
 

Three Months Ended December 31, 2015 Compared to Three Months Ended September 30, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (3 ) (1 ) (4 )
Consumer Specialties (1 ) 1
Total Materials Solutions (3 ) (3 )
 
Industrial Specialties (7 ) (5 ) (1 ) (13 )
Acetyl Intermediates 1 (7 ) (1 ) 2 (5 )
Total Acetyl Chain (2 ) (7 ) (1 ) 3 (7 )
 
Total Company (1 ) (4 ) (1 ) (6 )
           
 

Three Months Ended September 30, 2015 Compared to Three Months Ended June 30, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (5 ) (1 ) (6 )
Consumer Specialties
Total Materials Solutions (3 ) (1 ) (4 )
 
Industrial Specialties (5 ) 1 (4 )
Acetyl Intermediates (1 ) (3 ) (4 )
Total Acetyl Chain (2 ) (2 ) (4 )
 
Total Company (3 ) (1 ) (4 )
                   
 
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited (Cont.)
 
Three Months Ended June 30, 2015 Compared to Three Months Ended March 31, 2015
 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 2 (1 ) 1
Consumer Specialties 11 (1 ) 10
Total Materials Solutions 6 (1 ) (1 ) 4
 
Industrial Specialties 6 (4 ) (1 ) 1
Acetyl Intermediates (1 ) 1 (1 ) (1 )
Total Acetyl Chain 2 (1 ) (1 )
 
Total Company 3 (1 ) (1 ) 1 2
                   
 

Three Months Ended March 31, 2015 Compared to Three Months Ended December 31, 2014

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 6 2 (4 ) 4
Consumer Specialties (16 ) (2 ) (18 )
Total Materials Solutions (4 ) (3 ) (7 )
 
Industrial Specialties 16 (4 ) (5 ) 7
Acetyl Intermediates 1 (11 ) (3 ) (13 )
Total Acetyl Chain 5 (10 ) (4 ) 1 (8 )
 
Total Company 2 (6 ) (4 ) 1 (7 )
                   
 
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited
 
Three Months Ended December 31, 2016 Compared to Three Months Ended December 31, 2015
 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 20 (2 ) (1 ) 17
Consumer Specialties 2 (11 ) (9 )
Total Materials Solutions 12 (6 ) 6
 
Industrial Specialties (1 ) (6 ) (1 ) (8 )
Acetyl Intermediates (4 ) (2 ) (2 ) 1 (7 )
Total Acetyl Chain (4 ) (3 ) (2 ) 1 (8 )
 
Total Company 2 (4 ) (1 ) 1 (2 )
                   
 

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 16 (4 ) 12
Consumer Specialties (2 ) (7 ) (9 )
Total Materials Solutions 8 (5 ) 3
 
Industrial Specialties (1 ) (9 ) (1 ) (11 )
Acetyl Intermediates (3 ) (11 ) 1 (13 )
Total Acetyl Chain (3 ) (12 ) 2 (13 )
 
Total Company 1 (9 ) 2 (6 )
                   
 

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 8 (4 ) 1 5
Consumer Specialties 2 (8 ) (6 )
Total Materials Solutions 5 (5 ) 1 1
 
Industrial Specialties (1 ) (8 ) (9 )
Acetyl Intermediates (5 ) (13 ) 2 (16 )
Total Acetyl Chain (4 ) (12 ) 2 (14 )
 
Total Company (10 ) 1 (9 )
                   
 

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 5 (2 ) (1 ) 2
Consumer Specialties 17 (9 ) 8
Total Materials Solutions 9 (5 ) 4
 
Industrial Specialties (9 ) (1 ) (10 )
Acetyl Intermediates 6 (13 ) (2 ) 2 (7 )
Total Acetyl Chain 5 (13 ) (2 ) 1 (9 )
 
Total Company 7 (10 ) (2 ) 1 (4 )
                   
 

Three Months Ended December 31, 2015 Compared to Three Months Ended December 31, 2014

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (2 ) 1 (5 ) (6 )
Consumer Specialties (8 ) (3 ) (1 ) (12 )
Total Materials Solutions (5 ) (1 ) (3 ) (9 )
 
Industrial Specialties 8 (12 ) (6 ) (10 )
Acetyl Intermediates (17 ) (5 ) 1 (21 )
Total Acetyl Chain 2 (17 ) (5 ) 3 (17 )
 
Total Company (1 ) (11 ) (5 ) 2 (15 )
                   
 

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (3 ) (1 ) (7 ) (11 )
Consumer Specialties (10 ) (4 ) (1 ) (15 )
Total Materials Solutions (7 ) (2 ) (4 ) (13 )
 
Industrial Specialties (5 ) (8 ) (13 )
Acetyl Intermediates (6 ) (15 ) (6 ) (27 )
Total Acetyl Chain (5 ) (14 ) (7 ) 2 (24 )
 
Total Company (5 ) (10 ) (6 ) 1 (20 )
                   
 
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited (Cont.)
 
Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014
 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (1 ) (1 ) (9 ) (11 )
Consumer Specialties (10 ) (3 ) (1 ) (14 )
Total Materials Solutions (5 ) (2 ) (5 ) (12 )
 
Industrial Specialties (1 ) (4 ) (9 ) (14 )
Acetyl Intermediates (4 ) (10 ) (8 ) (22 )
Total Acetyl Chain (3 ) (10 ) (9 ) 3 (19 )
 
Total Company (4 ) (7 ) (8 ) 2 (17 )
                   
 

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (8 ) (8 )
Consumer Specialties (21 ) (3 ) (1 ) (25 )
Total Materials Solutions (9 ) (2 ) (5 ) (16 )
 
Industrial Specialties (4 ) 3 (9 ) (10 )
Acetyl Intermediates (2 ) (7 ) (6 ) (15 )
Total Acetyl Chain (3 ) (5 ) (7 ) 1 (14 )
 
Total Company (6 ) (3 ) (7 ) 1 (15 )
                   
 
Table 4c
Factors Affecting Segment Net Sales Year Over Year - Unaudited
 
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 11 (2 ) 9
Consumer Specialties 4 (8 ) (4 )
Total Materials Solutions 8 (5 ) 3
 
Industrial Specialties (1 ) (8 ) (1 ) (10 )
Acetyl Intermediates (2 ) (10 ) (1 ) 2 (11 )
Total Acetyl Chain (2 ) (10 ) (1 ) 2 (11 )
 
Total Company 2 (8 ) (1 ) 2 (5 )
                   
 

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

 
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (1 ) (1 ) (7 ) (9 )
Consumer Specialties (13 ) (3 ) (1 ) (17 )
Total Materials Solutions (6 ) (2 ) (4 ) (12 )
 
Industrial Specialties (4 ) (8 ) (12 )
Acetyl Intermediates (3 ) (13 ) (6 ) (22 )
Total Acetyl Chain (3 ) (11 ) (7 ) 2 (19 )
 
Total Company (4 ) (8 ) (6 ) 1 (17 )
                                       
 
Table 5
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Net cash provided by (used in) investing activities (439 ) (247 ) (54 ) (63 ) (75 ) (558 ) (97 ) (107 ) (181 ) (173 )
Net cash provided by (used in) financing activities (759 ) (292 ) 265 (259 ) (473 ) (66 ) (2 ) (99 ) 18 17
 
Net cash provided by (used in) operating activities 893 (47 ) 304 349 287 862 136 173 283 270
Capital expenditures on property, plant and equipment (246 ) (60 ) (58 ) (58 ) (70 ) (520 ) (89 ) (104 ) (165 ) (162 )
Capital (distributions to) contributions from NCI (24 ) (9 ) (9 ) (6 )   214   27   32   75   80  
Free cash flow(1)(2) 623   (116 ) 237   285   217   556   74   101   193   188  
______________________________

(1)

  Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our joint venture, Fairway Methanol LLC ("Fairway").

(2)

Excludes required debt service and capital lease payments of $56 million and $25 million for the years ending December 31, 2016 and 2015, respectively.
                                       
 
Table 6
Cash Dividends Received - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Dividends from equity method investments 131 15 6 73 37 176 54 5 29 88
Dividends from cost method investments 108 26 26 29 27 107 27 26 26 28
Total 239 41 32 102 64 283 81 31 55 116
                                       
 
Table 7
Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited
 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15
(In $ millions)
Short-term borrowings and current installments of long-term debt - third party and affiliates 118 118 92 119 116 513 513 463 123 128
Long-term debt, net of unamortized deferred financing costs 2,890   2,890   2,923   2,464   2,487   2,468   2,468   2,522   2,532   2,515  
Total debt 3,008 3,008 3,015 2,583 2,603 2,981 2,981 2,985 2,655 2,643
Cash and cash equivalents (638 ) (638 ) (1,252 ) (735 ) (716 ) (967 ) (967 ) (952 ) (988 ) (851 )
Net debt 2,370   2,370   1,763   1,848   1,887   2,014   2,014   2,033   1,667   1,792  
                                           
 
Table 8
Certain Items - Unaudited
 

The following Certain Items attributable to Celanese Corporation are included in Net earnings (loss) and are adjustments to non-GAAP measures:

 
2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 2015 Q4 '15 Q3 '15 Q2 '15 Q1 '15 Income Statement Classification
(In $ millions)
Employee termination benefits(1) 11 3 3 5 53 33 6 10 4 Other charges (gains), net
Plant/office closures 4 1 2 1 48 31 13 1 3 Other charges (gains), net / Cost of sales / SG&A
Singapore contract termination 174 174 Other charges (gains), net
Business optimization 7 3 1 1 2 20 4 6 5 5 Cost of sales / SG&A
Asset impairments 2 1 1 126 125 1 Other charges (gains), net
(Gain) loss on disposition of business and assets, net (4 ) (2 ) (2 ) 4 (1 ) 5 (Gain) loss on disposition, net
Commercial disputes(2) (2 ) (2 ) 6 5 1 Cost of sales / Other charges (gains), net
Write-off of other productive assets 4 1 1 2 39 39 Cost of sales / R&D
Employee benefit plan changes 1 1 4 (1 ) 2 1 2 Cost of sales / SG&A / R&D
Actuarial (gain) loss on pension and postretirement plans 102 102 127 126 1 Cost of sales / SG&A / R&D
Start-up costs(3) 2 1 1 10 (1 ) 8 3 Cost of sales
Mergers and acquisitions 3   2   1     SG&A
Certain Items attributable to Celanese Corporation 130   106   7   9 8 611 490   41 65 15
______________________________

(1)

  Primarily associated with site shutdown costs.

(2)

Primarily associated with litigation settlement costs.

(3)

Primarily associated with Fairway joint venture operational start-up costs.
                       
 
Table 9
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited
 
2016 2015

(In $ millions,
except percentages)

(In $ millions,
except percentages)

Net earnings (loss) attributable to Celanese Corporation 900 304
 

Adjusted EBIT (Table 1)

 

1,278 1,236

Adjusted effective tax rate (Table 3a)

17 % 18 %
Adjusted EBIT tax effected 1,061 1,014
 
2016 2015 Average 2015 2014 Average
(In $ millions, except percentages)
Short-term borrowings and current installments of long-term debt - third parties and affiliates 118 513 316 513 137 325
Long-term debt, net of unamortized deferred financing costs 2,890 2,468 2,679 2,468 2,586 2,527
Celanese Corporation stockholders' equity 2,588 2,378 2,483   2,378 2,818 2,598  
Invested capital 5,478   5,450  
 
Return on invested capital (adjusted) 19.4 % 18.6 %
 
Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital 16.4 % 5.6 %

Contacts

Celanese Corporation
Investor Relations:
Surabhi Varshney, +1 972-443-3078
Surabhi.Varshney@celanese.com
or
Media - U.S.:
Travis Jacobsen, +1 972-443-3750
William.Jacobsen@celanese.com
or
Media - Europe:
Jens Kurth, +49(0)69 45009 1574
J.Kurth@celanese.com

Contacts

Celanese Corporation
Investor Relations:
Surabhi Varshney, +1 972-443-3078
Surabhi.Varshney@celanese.com
or
Media - U.S.:
Travis Jacobsen, +1 972-443-3750
William.Jacobsen@celanese.com
or
Media - Europe:
Jens Kurth, +49(0)69 45009 1574
J.Kurth@celanese.com