Celanese Corporation Common Stock 2026 Q2 Earnings Call

Thanks, Daryl. Welcome to the Celanese Corporation second quarter 2026 earnings conference call. My name is Bill Cunningham, Vice President of Investor Relations. With me on the call today are Scott Richardson, President and Chief Executive Officer, and Chuck Kiersch, Chief Financial Officer. Celanese distributed its second quarter earnings release via Business Wire and posted prepared comments as well as a presentation on our investor relations website yesterday afternoon. As a reminder, we'll discuss non-GAAP financial measures today. You can find definitions of these measures as well as reconciliations to the comparable GAAP measures on our website. Today's presentation will also include forward-looking statements. Please review the cautionary language regarding forward-looking statements, which can be found at the end of both the press release and the prepared comments. Form 8-K reports containing all these materials have also been submitted to the SEC.

With that, Daryl, let's please go ahead and open it up for questions.

Thanks for the question, Patrick. I think our team showed a really strong resiliency and flexibility in the quarter, and I think it was evidenced by the opportunities we had that the global production and supply chain network that we have here at Celanese, really in both businesses, gave us some benefits in the quarter. In Acetyl Chain specifically, the team took actions as we got to the end of Q1, the early part of Q2, to ensure that we're going to be able to provide our customers with a reliability of supply. I think we certainly did that up and down the value chain, particularly in parts of the world that were more acutely impacted by the supply chain crisis, like Europe. Team did a good job of that.

We called out an expectation of moderation in the second half of the year, and that was contemplated in our $6 guide back when we did our call in May. I think as we look at things today, I wouldn't say that moderation has been any more acute than what we expected. I think what we have seen happen is just some changes a little bit in the environment, and we ended up getting a little bit more benefit in the second quarter than we had originally guided to. Some of that was a slight amount of EM pre-buying that we called out.

Q3 may be a little lower than we had originally guided to, really driven by the fact that we've been able to accelerate the plant closure in Lanaken and pull forward a little bit the EM closures as well, which is driving more of an inventory absorption hit in the second half than originally anticipated. In addition, because Ibn Sina didn't operate in the second quarter for much of the quarter, our equity earnings is going to be about $10 million lower than we had originally anticipated this year, which is all pretty much hitting in the third quarter. That's really that dynamic of Q2 to Q3. From an expectation perspective, the moderation that we had anticipated is about as expected.

I think our overarching objective in the Engineered Materials business is to ensure that we're aligning what we believe is the unique capabilities and products that we have with a deep understanding of key end markets and having segment strategies that go deep. The macro end uses that we go into, when you look at them at a very high level, don't have maybe a lot of growth. When you really dig in and get to some of the sub-segment areas, there are really great pockets of opportunities there. We've been reorienting our team in terms of a focus standpoint now for more than a year to ensure that we can really penetrate these sub-segment areas.

When you look at electronics, for example, today that's about 10% of the revenue of the Engineered Materials business, but actually makes up about 10%-15% of the contribution margin that we make in the business. Medical is less than 10% of the revenue, but about 20% of the contribution margin that we make. These two segments are not just foundational today for us, but with the amount of growth that we're seeing and the work that we're doing to be aligned around the right customers and to be able to penetrate what we think is going to be differentiated opportunities that we're going to be able to really have good long-term sustainable business and growth. We think that sets up really nicely for the future.

Yeah. Thanks, Ghansham. We've said for a long time that the majority of our profitability in the Acetyl Chain occurs in the Western Hemisphere. This is not new. When we look back over the last 15 years, that kind of 80%+ profitability being generated by the West has played out for, call it 12 of the last 15 years. This is not a new environment that we're in. We did see margins in Asia move up in the 2021 through 2023 timeframe. Outside of that, this has been the environment we've been dealing with for a long period of time. The team has really been pivoting the operating model in a way, with more and more of our tons being sold in the form of downstream derivatives because we have more differentiation there.