Celanese Corp (CE) Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 was pressured by severe Western Hemisphere auto/industrial destocking and amplified seasonality in Acetyls, driving net sales down 10% q/q to $2.37B and an operating loss of $1.405B; adjusted EBIT was $333M and operating EBITDA $517M (margins: 14% and 22%) .
• Adjusted EPS of $1.45 topped the company’s prior Q3 outlook of ~$1.25; GAAP diluted EPS was a loss of $(17.45) driven primarily by $1.696B of Certain Items (including goodwill/intangible impairments) .
• Management guided Q1 2025 EPS of $0.25–$0.50 and expects Q2 2025 to be ~$1.00 per share higher; they flagged ~$100M of Q1 headwinds (seasonality in tow/medical implants, Bishop outage, China JV dividend timing) .
• Strategic focus: accelerated cost reductions (> $75M SG&A actions completed), cash generation, deleveraging (dividend cut to $0.03 per share in Feb 2025), EM footprint simplification, and targeted divestitures; price increases announced in EM effective Mar 1, 2025 .

What Went Well and What Went Wrong

• What Went Well

  • Adjusted EPS of $1.45 exceeded the company’s prior guidance for Q4 (~$1.25), supported by cost actions and inventory drawdowns to release working capital .
  • Clear strategic priorities under new CEO: intensify cost reduction, leverage Acetyl Chain optionality and EM pipeline, and increase cash flow to deleverage; “We continue to take actions to reduce costs and accelerate growth” — Scott Richardson .
  • Free cash flow of $381M in Q4 and operating cash flow of $494M demonstrated strong cash generation in a weak demand backdrop .

• What Went Wrong

  • GAAP loss was significant due to $1.696B in Certain Items in Q4 (primarily goodwill/intangible impairments), yielding diluted EPS of $(17.45) and operating margin of (59.3)% .
  • Severe destocking in Western Hemisphere auto/industrial weighed on EM: Q4 EM net sales down ~14% q/q to $1.281B; EM adjusted EBIT fell to $156M; EM operating loss of $(1.508)B reflects impairment charges .
  • Acetyls faced amplified seasonality and pricing pressure; segment net sales declined 7% q/q to $1.110B, with adjusted EBIT down to $253M (vs. $276M in Q3) .

Financial Results

Notes:

• Differences between GAAP and non-GAAP reflect “Certain Items,” notably Q4 impairments (see Table 8 in the 8-K) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “With little indication of near-term recovery, it is our job to drive productivity and earnings growth... we are focused on three strategic priorities: intensifying cost reduction, driving growth through our AC optionality model and EM pipeline model, and increasing cash flow to deleverage the balance sheet.” — Scott Richardson, CEO .
• Q1 outlook and sequential lift: “We anticipate first quarter earnings per share to be $0.25 to $0.50... we anticipate second quarter earnings per share to be approximately $1.00 per share higher than the first quarter” .
• EM actions and growth focus: EM leadership changes and emphasis on reducing complexity and accelerating project pipeline in EV, medical, connectivity .

Q&A Highlights

• Deleveraging and capital structure: Equity raise viewed as highly dilutive; plan centers on cash generation, terming debt opportunistically, and divestitures; credit markets supportive .
• Divestitures scope/size: Target assets not core to AC optionality/EM engineered thermoplastics/elastomers model; sizes similar to prior Food Ingredients sale, with smaller pieces possible .
• EM margin compression and pricing: Standard-grade applications at unsustainable margin levels; focus on mix improvement and offsets; early signs of price stabilization .
• Inventory rebalancing: Value chain inventory reduction should largely complete in Q1; deliberate inventory actions continue but less material than Q4 .
• Acetyls earnings power: Contract resets are a headwind, but optionality across value chain/geographies targeted to offset; Clear Lake expansion at full run-rate exiting 2024 .
• Cash-first operational posture: “Cash is the priority... unlocking cash via dividend actions, capex cuts, working capital focus, divestitures” .

Estimates Context

• S&P Global consensus estimates were unavailable at the time of analysis due to data access limits; quantitative comparison vs Street is therefore not provided. Values retrieved from S&P Global*.
• Notably, Q4 adjusted EPS ($1.45) exceeded Celanese’s prior company outlook (~$1.25) communicated with Q3 results, indicating internal guidance outperformance amid weak demand .

Financial Results – Segment Narratives

• Acetyl Chain: Q4 net sales $1.110B (−7% q/q: −4% volume, −2% price), adjusted EBIT $253M; optionality actions included temporary idling to align to demand .
• Engineered Materials: Q4 net sales $1.281B (−14% q/q; −10% volume, −3% price); adjusted EBIT $156M; operating loss reflects impairments; focus on cost reduction and >$200M inventory draw .

Key Takeaways for Investors

• Near-term setup: Q1 2025 EPS guide $0.25–$0.50 with ~$100M identifiable headwinds; Q2 expected ~+$1.00 vs Q1; trading likely sensitive to signs of auto/industrial restocking and Bishop outage normalization .
• Cash generation and deleveraging are central; dividend at $0.03 underscores prioritization; monitor progress on divestitures and debt maturity extensions .
• EM margin repair plan is critical: complexity reduction ($50–$100M), pricing actions (effective Mar 1), and mix shift into EV/medical should support recovery if competitive pressure eases .
• Acetyls optionality remains a defensive lever; watch Asia pricing dynamics, Clear Lake utilization, and contract reset offsets for 2025 earnings durability .
• Internal guidance beat in Q4 on adjusted EPS demonstrates execution under duress; sustained performance depends on demand normalization and cost initiatives sticking .
• Regional mix shifting (Asia growing, Europe declining) and JV dividend timing changes can influence cash cadence; model Q2 start for China JV dividends .
• Catalysts: evidence of inventory rebalancing completion, EM price/margin stabilization, successful asset sales, and tangible FCF uplift below EBITDA (working capital, cash tax, capex cuts) .