• Cost Actions: Executed over $75 million in cost reductions as outlined in Q3 earnings call.
• Capital Plan Reduction: Reduced 2025 capital plan to $300-$350 million, a $100 million decrease from the previous year.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Celanese Corp (NYSE:CE) executed over $75 million in cost actions and reduced its 2025 capital plan by $100 million, demonstrating strong cost management.
• The company added new leadership and board members with expertise in finance and operations to drive improved results and shareholder value.
• Celanese Corp (NYSE:CE) is focused on cash generation, margin expansion, and productivity, which are expected to enhance shareholder value.
• The company is actively pursuing divestitures to improve its operating model and reduce leverage, indicating a strategic approach to portfolio management.
• Celanese Corp (NYSE:CE) expects free cash flow for 2025 to be higher than 2024, driven by lower cash taxes, reduced CapEx, and improved working capital management.

Negative Points

• Celanese Corp (NYSE:CE) faces challenges with margin degradation in some product lines, including nylon, which offsets cost improvements.
• The company is dealing with competitive dynamics in its largest product lines, impacting year-over-year improvements.
• There is uncertainty regarding the macroeconomic environment, which could affect the company's ability to achieve its financial targets.
• Celanese Corp (NYSE:CE) has not provided specific guidance for the second half of 2025, indicating potential uncertainty in future performance.
• The company is experiencing headwinds from contract resets and natural gas costs, which could impact its financial performance.

Q & A Highlights

• Warning! GuruFocus has detected 8 Warning Signs with CE.

Q: Scott, could you provide some insight into the potential size and timing of the divestitures you mentioned? A: We've been working on divestitures for some time, similar in size to our previous food ingredients business transaction. Most opportunities are around that size, with some smaller and some slightly larger.

Q: Given the current balance sheet, what are your thoughts on potentially raising equity to help deleverage? A: Our capital structure is focused on funding acquisitions with debt. We're unlocking cash through dividend actions, CapEx reduction, and working capital management. Equity is highly dilutive, and we don't see it as necessary given the strength of the debt market.

Q: Can you explain the expected improvement in free cash flow for 2025 compared to 2024? A: While we haven't provided a full-year guide, we expect significant improvements in free cash flow below the EBITDA line, with working capital becoming a source of cash, lower cash taxes, and reduced CapEx by roughly $100 million.

Q: How do you view the potential of the M&M business for Celanese in the long term? A: Despite challenges, there are growth opportunities in areas like high-temp nylon for electric vehicles and Alaska Mic products for athletic apparel. We need to aggressively work on the project pipeline and cost management to realize this potential.

Q: Are you running Celanese to maximize cash flow over earnings, given the current debt situation? A: Cash is a priority due to our debt levels. We're focused on unlocking cash through dividend adjustments, CapEx reduction, and aggressive divestiture efforts, while maintaining a balance between cash flow and earnings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.