Q2 2024 Celanese Corp Earnings Call

Operator: Greetings and welcome to Celanese's second quarter 2024 earnings call and webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Cunningham, vice president of investor relations. Thank you. You may be. Thanks.

Unknown Executive: Greetings and welcome to Celanese's second quarter 2024 earnings call and webcast. At this time, all participants are in a listen-only mode.

Greetings and welcome to Celanese second quarter 2024 earnings call and webcast.

Speaker Change: At this time all participants are in a listen only mode.

Unknown Executive: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

William Cunningham: It is not my pleasure to introduce your host, Bill Cunningham, Vice President of Investor Relations. Thank you, you may begin.

It is now my pleasure to introduce your host Bill Cunningham Vice President of Investor Relations. Thank you you may begin.

Unknown Executive: Thanks, Diego.

Bill Cunningham: Thanks Diego.

Bill Cunningham: Welcome to the Celanese Corporation second quarter 2024 earnings conference call. My name is Bill Cunningham, Vice President of Investor Relief. With me on the call are Lori Ryerkerk, Chairman of the Board and Chief Executive Officer; Scott Richardson, Chief Operating Officer; and Chuck Kyrish, Chief Financial Officer.

William Cunningham: Welcome to the Celanese Corporation, Second Quarter, 2024 earnings conference call. My name is Bill Cunningham, Vice President of Investor Relations. With me on the call, our Lori Ryerkerk, Chairman of the Board and Chief Executive Officer. Scott Richardson, Chief Operating Officer. And Chuck Kyrish, Chief Financial Officer.

Bill Cunningham: Welcome to the Celanese Corporation second quarter 2024 earnings Conference call.

Bill Cunningham: My name is Bill Cunningham, Vice President of Investor Relations.

Speaker Change: With me on the call are Lori Reicher, Chairman of the board and Chief Executive Officer.

Speaker Change: Scott Richardson Chief operating officer.

And Chuck Irish Chief Financial Officer.

Bill Cunningham: Celanese distributed its second quarter earnings release via BusinessWire and posted prepared comments 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 gap 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 comment Form 8K reports containing all of these materials have also been submitted to the SEC. With that, Diego, let's please go ahead and open it up for questions. Thank you.

Speaker Change: Sony's distributed its second quarter earnings release via business wire and posted prepared comments on our Investor Relations website yesterday afternoon.

William Cunningham: So many distributed, it's second quarter, earnings release the of Business Wire, and posted prepared comments 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 reconciliation, to the comparable gap measures on our website.

Speaker Change: As a reminder, we will 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.

William Cunningham: 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 prepared comments.

Speaker Change: 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.

Speaker Change: In prepared comments.

William Cunningham: Form 8-K reports containing all of these materials have also been submitted to the SEC.

Form 8-K reports containing all of these materials.

I've also been submitted to the SEC.

William Cunningham: With that, Diego, let's please go ahead and open it up for questions. Thank you.

Speaker Change: With that Diego, let's please go ahead and open it up for questions.

Diego: Thank you.

Unknown Executive: We'll not conduct our question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Operator: We will now conduct our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like.

Speaker Change: We'll now conduct a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: A confirmation tone will indicate that your line is in the question queue you.

You May press Star two if you would like to remove your question from the queue.

Unknown Executive: For participants using speaker equipment, it may be necessary to pick up your hands at before pressing the star key.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.

Joshua Spector: Our first question comes from Josh Spector with UBS. Please say your question.

Our first question comes from Josh Spector with UBS. Please state your question.

Joshua Spector: Yeah, good morning. So I wanted to ask you about some of the moving pieces within engineering materials. I mean, obviously, nice to see a good step up here in the second quarter. But I think there's been a constant debate around where the market is and what's stable and in your control versus what needs to improve the market. So I guess, when you look at your expectations about the improvement into 2Q, or sorry, into 3Q, and maybe a stable second half, what are you assuming behind the markets to get there versus cost savings in your control? And given all the cuts we've made to expectations, is this kind of a point where you feel like you're now conservative enough? Or are there other things that you would have us watch out for?

Josh Spector: Yeah. Good morning, So I wanted to ask on some of the moving pieces within engineered materials I mean, obviously nice to see a good step up here in the second quarter, but I think there's been a constant debate around you know where the market is and what stable and in your control versus what needs to have a market improvement. So I guess when you look at your expectation.

Joshua Spector: Yeah, good morning. I wanted to ask on some of the moving pieces of the engineer materials. I mean, obviously, nice to see a good step up here in the second quarter.

Joshua Spector: But I think it's been a constant debate around where the market is and what's stable in your control versus what needs to have a market improvement. So I guess when you look at your expectations about the improvement into two queue, or sorry into three queue and maybe a stable second half, what are you assuming behind the market to get there versus cost savings in your control?

Speaker Change: It is about the improvement into two Q, sorry, Q3, Q and maybe its stable second half what are you assuming behind the markets to get there versus cost savings in your control and given all the cuts we've made to expectation.

Scott Richardson: Thanks.

Joshua Spector: And given all the cuts we've made to expectations, is this kind of a point where you feel like you're now conservative enough, or are there other things that you would have to watch out for. Thanks.

Speaker Change: Is this kind of a point, where you feel like you're now conservative enough or are there other things that you would have us watch out for it. Thanks.

Scott Richardson: Good morning, Josh. Thanks for the question. If we look at our Q3 guidance, I would say we're generally expecting things to be unchanged in terms of overall market conditions. We do expect a little bit of growth in auto sales in the second half, particularly in China, which I think is consistent with what others in the industry are seeing, but generally, everything else is pretty stable. We're not expecting a lot of downturns.

Scott Richardson: Good morning, Josh. Thanks for the question. If we look at our queue three guidance, I would say we're generally expecting things to be unchanged in terms of overall market conditions. We do expect a little bit of growth in auto bills in the second half, particularly in China, which I think it's consistent with what others in the industry are saying. But generally, everything else is pretty stable. We're not expecting a lot of downturn. That's that we do continue to expect some moderate growth in our volumes, based on the strengths of our product pipeline. We also expect some continued growth in margin, based on synergy pull-through, and also pull-through of lower cost raw materials in inventory.

Speaker Change: Good morning, Josh Thanks for the question.

Speaker Change: We look at our Q3 guidance am I I would say, we're generally expecting things to be unchanged in terms of overall market conditions, we do expect a little bit of growth in auto builds in the second half, particularly in China, which I think it's consistent with what others in the industry are saying, but generally everything else is.

Diego: Pretty stable, we're not expecting a lot of downturn that said, we do continue to expect some moderate growth in our volumes based on the strength of our product pipeline. We also expect some continued growth and margin based on synergy pull through and also a pull through of lower cost raw materials and inventory.

Scott Richardson: That said, we do continue to expect some moderate growth in our volumes based on the strength of our product pipeline. We also expect some continued growth in margin based on standard deep pull through and also pull through of lower cost raw materials inventory. So I would say, you know, we don't need market improvement, I guess maybe other than that little bit in the auto industry in order to achieve our second half outlook from an engineering materials standpoint.

Scott Richardson: So I would say, you know, we don't need to market improvement. I guess maybe other than that little bit in auto, in order to achieve our second half outlook, from an engineering material. Point.

Speaker Change: We don't need the market improvement and I guess, maybe other than that little bit in auto in order to achieve our second half outlook from an engineered material standpoint.

Scott Richardson: And I guess just within the outside specifically considering that's been an area of kind of weakening demand, is it specific new platforms on certain cars that has driven it is original with Asia? I guess what gives you the confidence there specifically?

Scott Richardson: And I guess just within the auto side specifically, considering that's been an area of kind of weakening demand, is it specific new platforms on certain cars that have driven it? Is it regional with Asia? I guess what gives you the confidence there specifically?

Speaker Change: And I guess just within the auto side, specifically, considering that's been an area kind of weakening demand is it specific new platforms on certain cars that has driven it is the regional with Asia I guess, what gives you the confidence there specifically.

Scott Richardson: I think a lot of it is the work around the integration. You know, we now have access to customers with Celanese materials that we previously didn't have because of the contacts that our heritage Dupont had, particularly in non-China parts of Asia. And similarly, we have some outlets for some of the heritage M&M materials that we didn't have before.

Scott Richardson: I think a lot of it is the work around the integration, you know, we now have access to customers with Celanese materials that we previously didn't have because of the contacts that our Heritage DuPont had, particularly in non China parts of Asia. And similarly, we have some outlets for some of the Heritage M&M materials that we didn't have before. And I think it's really again, the project pipeline. I mean, we've been working now for well for a long time, but with the entire portfolio for 18 months, to really identify those new customers, those new orders, those new areas within existing customers, and make sure that we're strong across all the platforms and auto ICE engineer materials and hybrids and you know we called out last quarter earnings in fact some of the applications we're getting on EVs with nylon which is which is an area where DuPont didn't necessarily

Speaker Change: I think a lot of it has to work around the integration you know, we now have access to customers with celanese materials that we previously didn't have because of that.

Speaker Change: Contacts that are heritage Dupont had particularly in non China parts of Asia and similarly, we have some outlets for some of the heritage Eminem materials that we didn't have before and I think it's really getting the project pipeline I mean, we've been working now for well for a long time that with the <unk>.

Scott Richardson: And I think it's really again the project pipeline. I mean, we've been working now for, well, for a long time, but with the entire portfolio for 18 months to really identify those new customers, those new orders, those new areas. Within existing customers and make sure that we're strong across all the platforms and auto ICE, engineer material and hybrids. And, you know, we called out last quarter earnings. In fact, some of the applications were getting on EVs with my line, which is an area where Dupont doesn't necessarily play.

Speaker Change: Tire portfolio for 18 months to really identify those new customers those new orders those new areas within existing customers and make sure that we're strong across all the platforms in auto.

Diego: But I see E engineered materials and hybrids and we called out last quarter earnings in fact, some of the applications. We're getting on Evs with nylon, which is which is an area where dupont didn't necessarily play.

Unknown Executive: Let's just take a look.

Joshua Spector: Understood. Thanks, Lori.

Speaker Change: Understood. Thanks Laurie.

Diego: Yeah.

Michael Leithead: Our next question comes from Mike Tyson with Wells Fargo. Please state your question. Hey, good morning. In terms of the fourth quarter versus the third, it does look like you'll need some improvement. Unfortunately, is at the midpoint, is a lot of that within your control? Some of the factors that you've talked about in the past. Yeah, you know, if you do the math, you would expect that we need some additional list in the fourth quarter. I would put it down to a few things. We, you know, it should be our largest quarter of synergy capture.

Operator: Our next question comes from Mike Sison with Wells Fargo. Please state your question.

Speaker Change: Our next question comes from Mike Sison with Wells Fargo. Please state your question.

Michael Sison: Hey, good morning. In terms of the fourth quarter versus the third, it does look like you'll need some improvement sequentially at the midpoint. Is a lot of that within your control, some of the factors that you've talked about in the past?

Mike Sison: Hey, good morning.

Speaker Change: In terms of the fourth.

Speaker Change: Fourth quarter versus the third and it does look like they'll need sometimes urban sequentially.

Speaker Change: Is that the midpoint is is there's a lot of that within your control some of the factors that you've talked about in the past.

Scott Richardson: Yeah, you know, if you did the math, you would expect that we need some additional lists in the fourth quarter. I would put it down to a few things.

Speaker Change: Yeah.

Speaker Change: Yeah. If you do the math you would expect that we need some additional lift in the fourth quarter I would put it down to a few things. We you know it should be our largest quarter of synergy capture for the engineered materials. We should start seeing more of a full year run rate on clear Lake as we'll have gotten through all the effects of that.

Scott Richardson: For the engineer materials, we should start seeing more of a full year run rate on Clear Lake, as we'll have gotten through all the effects of the supplier outages and a little bit from Hurricane Barrel in the third quarter. So that will be an uplift there. I would also say, you know, our mix has changed. So, you know, with the acquisition of M&M, we now have a higher presence in China. And so we wouldn't expect as much seasonality now in the fourth quarter as we've typically seen with the heritage cell in East portfolio. So all of those things come together, you know, weren't, again, we're not other than this little bit of uptick that's being predicted in auto.

Speaker Change: Flyer outages and a little bit from hurricane barrel in the third quarter. So that will be an uplift. There I would also say you know our mix has changed so you know with the acquisition of Eminem, We now have a higher presence in China and so we wouldn't expect as much seasonality now in the fourth quarter as we've typically seen what the hell.

Scott Richardson: We, you know, it should be our largest quarter of synergy capture. For engineering materials, we should start seeing more of a full year run rate on Clear Lake as we'll have gotten through all the effects of the supplier outages and a little bit from Hurricane Beryl in the third quarter. So that will be an uplift there. I would also say, you know, our mix has changed. So, you know, with the acquisition of M&M, we now have a stronger presence in China.

Speaker Change: Richard Celanese portfolio. So all of those things come together and you don't want again, we're not other than there's a little bit of uptick that's being predicted in auto we're not really expecting material conditions to change. So it really will be the result of kind of the self help that the activities that we've undertaken over the last.

Scott Richardson: And so we wouldn't expect as much seasonality now in the fourth quarter as we've typically seen with the Heritage Celanese portfolio. So all of those things come together. You know, again, we're not, other than this little bit of an uptick that's being predicted in the auto industry, we're not really expecting material conditions to change. So it really will be the result of kind of the self-help, the activities that we've undertaken over the last 18 months.

Scott Richardson: We're not really expecting material conditions to change. So it really will be the results of kind of the self-help, the activities that we've undertaken over the last 18 months.

Scott Richardson: You know, the one thing I'd add to that, Mike, is the work we're doing in the commercial organization in the engineer materials business. You know, we integrated commercial teams in the early part of Q2 last year. And, you know, the average length of time that projects sit in our pipeline is about 18 to 24 months. So we're really coming up on that first 18-month plateau here at the end of this year in the fourth quarter and going into next year. And you're given kind of the trajectory we've seen on the success of the volume left from Q1 to Q2.

Chuck Kyrish: Yeah, the one thing I'd add to that, Mike, is the work we're doing in the commercial organization in the engineering materials business. We integrated commercial teams in the early part of Q2 last year, and the average length of time that projects sit in our pipeline is about 18 to 24 months, so we're really coming up on that first 18-month plateau here at the end of this year in the fourth quarter and going into next year, and given kind of the trajectory we've seen on the success of the volume lift from Q1 to Q2, we're really starting to see the benefit of that model play out with bringing M&M into that EM business, and so you do have a little bit of an element of that as well from how we see the pipeline developing.

Mike Sison: 18 months, yeah. The one thing I'd add to that Mike is the work we're doing in the commercial organization in the engineered materials business, we integrated the commercial teams.

Speaker Change: In the early part of Q2 last year and the average length of time that project sitting in our pipeline. It's about 18 to 24 months.

Speaker Change: So we're really coming up on that first 18 months plateau here at the end of this year in the fourth quarter and going into next year and given kind of the trajectory. We've seen on the success of the volume lift from Q1 to Q2, we're really starting to see the benefit of that model play out.

Scott Richardson: We're really starting to see the benefit of that model play out with bringing M&M into that EM business. And so, you do have a little bit of element of that as well from how we see the pipeline developing. At the end of the year.

Speaker Change: With bringing <unk> into that E M business and so you do have a little bit of a element of that as well from how we see the pipeline developing at the end of the year.

Michael Leithead: Great, and the quick follow-up, you know, the macro hasn't been very helpful for you and Ken's in general, so if things get worse sequentially into the second half, you know, what changes can you make to sort of hit this range and then, you know, how do you, how do you sort of help us think about, you know, 25 and the ramp up potential of earnings, the earnings bar for Celanese longer term? Yeah, look, if things get worse sequentially into the second half, you know, what changes can you make to sort of hit this range and then, you know, how do you sort of help us think about, you know, 25 and the ramp up potential of earnings, the earnings bar for Celanese longer term?

Lori Ryerkerk: Great. And a quick follow up. You know, the macro hasn't been very helpful to you and Ken in general. So if things get worse sequentially into the second half, you know, what changes can you make to sort of hit this range? And then, you know, what, how do you, how do you sort of help us think about, you know, 25 and the ramp-up potential of earnings, the earnings for our facilities in the longer term?

Diego: Great.

Speaker Change: Quick follow up.

Speaker Change: The macro hasn't been very helpful for you in Kansas in general sell it if things get worse sequentially.

Speaker Change: Second half you know what what changes can you make to sort of hit this range and then you know what well how do you. How do you how do you sort of help US think about you know 25, and the ramp up potential of earnings the earnings power for celanese longer term.

Scott Richardson: Yeah, look, if things get worse, you can always get worse, right?

Lori Ryerkerk: Yeah, look, things can always get worse, right? And we've seen that.

Speaker Change: Yeah look if things can always get worse right and we've seen that but I would also say you know things things have been certainly very challenging this year and the results that we're delivering this year are really based on the remarkable efforts of our teams and their ability to innovate there the resilience that they've shown in and really looking at.

Scott Richardson: And we've seen that, but I would also say, you know, things have been certainly very challenging this year, and the results that we're delivering this year are really based on, you know, the remarkable efforts of our teams and their ability to innovate, the resilience that they've shown and, and really, you know, looking under every rock, resources of value, so it gets worse, that will continue. I would say, you know, Europe, for all practical measures, has been in a near recessionary kind of condition. So, you know, we think it's going to be stable based on what we can see in our order books right now, certainly for Q3.

Diego: Under every rock for sources of value. So if it gets worse that will continue I would say you know Europe for all practical measures who's been in the near recessionary kind of condition.

Lori Ryerkerk: But I would also say, you know, things have certainly been very challenging this year. And the results that we're delivering this year are really based on, you know, the remarkable efforts of our teams and their ability to innovate, their ability, the resilience that they've shown, and really, you know, looking under every rock for sources of value. So if it gets worse, that will continue. I would say, you know, Europe has been in a near recessionary kind of condition.

Speaker Change: So you know.

Lori Ryerkerk: So, you know, we think it's going to be stable based on what we can see in our order books right now, certainly for Q3. As we go into 2025, we will continue to have self-help, which will help lift us in 2025. I think if you look at 2025, we can think about, you know, the run rate that we'll see in the second half of the year continuing through 2025. Then we'll have another tranche of M&M synergies on top of that, as well as full productivity from Clear Lake next year, and probably some additional interest rate benefits as well.

Diego: We think it's gonna be stable based on what we can see in our order books right now certainly for Q3 as we go into 2025, we will continue to have self help which will help lift us in 25 I think if you look at 25, we can think about you know the run rate that we'll see in the second half of the year continues.

Scott Richardson: As we go into 2025, you know, we will continue to have self-help, which will help lift us in 25. I think if you look at 25, we can think about, you know, the run rate that we'll see in the second half of the year continuing through 25. Then we'll have another tranche of M&M synergies on top of that, as well as full productivity from Clear late next year and probably some additional interest rate benefits as well. So, I think, you know, the things that we've seen this year will continue to compound into next year and raise the 2025 results.

Diego: Going through 25, they will have another tranche of Eminem synergies on top of that as well as full productivity from clear late next year and probably some additional interest rate benefits as well. So I think you know the things that we've seen this year well continue to compound into next year and raised the 2025 resolved but.

Lori Ryerkerk: So I think, you know, the things that we've seen this year will continue to compound into next year and raise the 2025 results. But it's, you know, frankly, it's just too early to tell what the fundamental economic conditions are going to be in 2025.

Scott Richardson: But, you know, frankly, it's just too early to tell what the fundamental economic conditions are going to be in 2025 yet.

Speaker Change: Frankly, it's just too early to tell what the fundamental economic conditions are going to be in 2020 five yet.

Speaker Change: Thank you.

Operator: Our next question comes from Mike Leithead with Barclays. Please state your question.

Michael Leithead: Our next question comes from Mike, late head with Barclays. Please do your questions. Great.

Mike Latehead: Our next question comes from Mike late head with Barclays. Please state your question.

Michael Leithead: Great, thanks. Good morning, team.

Mike Latehead: Great. Thanks, Good morning, Tim.

Unknown Executive: Thanks.

Michael Leithead: Good morning, team. A few questions on the ass of Peel's force measure. I guess first, are we still in force measure and when do you expect to fully resolve these disruptions? Two, should we think about any insurance proceeds or any sort of restitution for you guys from these disruptions?

Mike Leithead: A few questions on the asset yields force Majeure I guess first are we still in force majeure and when do you expect to fully resolve these disruptions to should we think about any insurance proceeds or any sort of restitution for you guys from these disruptions and then finally apologies if I missed this but what is the all in expected costs.

Michael Leithead: A few questions on the Asset Peels force majeure. I guess first, are we still in force majeure and when do you expect to fully resolve these disruptions? Two, should we think about any insurance proceeds or any sort of restitution for you guys from these disruptions? And then finally, apologies if I missed this, but what is the all-in expected cost impact from this audit?

Michael Leithead: And then finally, apologies if I missed this, but what is the all-in expected cost impact from this outage?

Speaker Change: Impact.

Diego: From this outage.

Scott Richardson: Thanks for the question, Mike. We are still in force majeure. The units, obviously, are restarted, running well. But it is a long supply chain in the Western Hemisphere. So we're in force majeure until we can reestablish those supply chains into Europe, which is the work going on currently.

Lori Ryerkerk: Thanks for the question, Mike. We are still in force majeure. The units are obviously restarted and running well, but it is a long supply chain in the Western Hemisphere. So we're in force majeure till we can reestablish those supply chains into Europe, which is the work going on currently. But we fully expect that we'll lift the force majeure sometime in this quarter. In terms of restitution, you know, we're really just focused right now and have been focused in the second quarter on, you know, working with our suppliers to understand what the issues were, how we could get through them more quickly, how to address reliability issues going forward, and how to make sure that we maintain really good relationships. You know, that's really been our focus now. And, you know, we'll have discussions about any form of restitution later.

Speaker Change: Thanks for the question Mike We are still enforcement you are the units obviously are restarted running well, but it is a long supply chain in the western hemisphere. So were enforced mature until we can reestablish those supply chains into Europe, which is the work going on currently but we fully expect that we'll let.

Lori Ryerkerk: Okay, I'm sorry, I didn't just go with cost impact. Oh, I'm sorry.

Scott Richardson: But we fully expect that we'll let the force measure sometime in this quarter. In terms of restitution, you know, we're really just focused right now and have been focused in the second quarter on, you know, working with our suppliers to understand, you know, what the issues were. How we could get through them more quickly. How do address reliability issues going forward? How to make sure that we maintain really good relationship?

Diego: The force majeure or sometime in this quarter in.

Speaker Change: In terms of restitution, yeah, we're really just focused right now and have been focused in the second quarter on working with our suppliers to understand you know what the issues were how we could get through them more quickly how do I address reliability issues going forward how to make sure that we maintain really good relationship.

Scott Richardson: You know, that's really been our focus now and, you know, we'll have discussions about any former restitution later. Oh, I'm sorry, I just missed it. Yeah, so this quarter, second quarter I would say was about 35 million, and then next quarter we'll see another 5 to 10 million.

Diego: Yeah, that's really been our focus now and you know well have.

Diego: Have discussions about any any form of restitution later.

Speaker Change: Okay, I'm, sorry, and then just all that cost impact Oh, I'm, sorry, I just missed it yeah and so what you know.

Lori Ryerkerk: Oh, I'm sorry. I just missed it. Yeah, so this, this quarter, second quarter, I would say was about $35 million. And then next quarter, we'll see another $5 to $10 million.

Speaker Change: This this quarter second quarter I would say it was about 35 million and then next quarter, well see another $5 million to $10 million.

Michael Leithead: Okay, great, and then I just want to follow up on some of the competitive dynamics in your product. I think in the remark, you know, commodity, commodity nylon is below the cost curve. There's been some opportunities in the domestic pricing, if you will, and some other areas.

Lori Ryerkerk: Okay, great. And then I just want to follow up on some of the competitive dynamics of your product. I think in your remarks, you noted commodity nylon is below the cost curve. There's been some opportunistic pricing, if you will, in some other areas. I guess, what is your best kind of judgment about where we stand today? Are we still atrophying in price in some of these areas? Are we stabilizing? Or have we started to recover here? As you called out, Mike, I mean, we definitely

Speaker Change: Okay, Great and then I just wanted to follow up on some of the competitive dynamics in your product I think in the remarks, you noted commodity commodity nylon is below the cost curve. There's been some opportunistic pricing. If you will in some other areas I guess, what is your best kind of judgment about where we stand today.

Scott Richardson: I guess, what is your best kind of judgment about where we stand today, or are we still atrophying in price in some of these areas, or are we stabilizing, or have we started to recover here? As you've called out, Mike, I mean, we definitely saw price pressure on Ron nylon polymer this last quarter. It is definitely gone down, and it's affected some of the margin uplift we expected from pull through. That said, I think it really points out the benefit of the strategy we took, though, to shut down, stand a great polymerization at in trope, and really be able to give ourselves flexibility in terms of where we choose to source, raw nylon, polymer, and compounded for our customers.

Speaker Change: Are we still atrophy and price in some of these areas are we stabilizing or have we started to recover here.

Scott Richardson: As you called out, Mike, I mean, we definitely saw price pressure on raw nylon polymer this last quarter. It has definitely gone down, and it's affected some of the margin uplift we expected from pull-through. That said, I think this really points out the benefit of the strategy we took, though, to shut down standard-grade polymerization at Oontrope and really be able to give ourselves flexibility in terms of where we choose to source raw nylon polymer and, you know, compound it for our customers.

Speaker Change: As you called out Mike I mean, we definitely saw price pressure on not raw nylon polymer. This last quarter. It has definitely gone down and it's it's affected some of the margin uplift we expected from the pull through that said I think that's really points out the benefit of the strategy, we took though to shut down our standard.

Speaker Change: Great polymerization AD drove and really be able to give ourselves flexibility in terms of where we choose to source raw nylon polymer and compounded for our customers. So you know that's really paid off we would have seen more of a hit this past quarter.

Scott Richardson: So, you know, that's really paid off. We would have seen more of a hit this past quarter if we hadn't done that.

Scott Richardson: So, you know, that's really paid off. We would have seen more of a hit this past quarter if we hadn't done that. I would say on the other products, not as much pricing pressure as margin pressure as we've seen some increase in raw materials, especially POM, where we've seen some increase in ethylene. So, you know, those being the two biggest, I would say, again, nylon, its price, but mitigated by the steps that we've taken. POM, we have seen pressure on ethylene.

Speaker Change: Quarter, if we if we hadn't done that I would say on the other products are not as much pricing pressure as margin pressure as we've seen some increase in raw materials, especially think about palm where we've seen some some increase in ethylene so those being the two big areas I would say again nylon its price.

Scott Richardson: I would say on the other products, not as much pricing pressure as margin pressure, as we've seen some increase in raw materials, especially think about palm where we've seen some increase in ethylene. So, you know, those being the two biggest, I would say, get nylon, it's price, but mitigated by the steps that we've taken palm. We've seen pressure on ethylene pricing. Great.

Diego: But mitigated by the steps that we've taken palm we've seen pressure on ethylene pricing.

Speaker Change: Great. Thank you.

Jeffrey Zekauskas: Our next question comes from Jeff Sikaskas with JP Morgan. Please sit your question. Thanks very much.

Jeffrey Zekauskas: Our next question comes from Jeff Zekauskas with JP Morgan. Please state your question.

Speaker Change: Our next question comes from Jeff Zekauskas with J P. Morgan. Please state your question.

Jeff Zekauskas: Thanks very much.

Jeffrey Zekauskas: Were the outages at Clear Lake caused by anything else other than carbon monoxide difficulties? Was there some other source of inefficiency in the quarter?

Jeffrey Zekauskas: Worthy outages at Clear Lake caused by anything else other than carbon monoxide difficulties. Was there some other source of inefficiency in the quarter? Yes, thanks for the question, Jeff. Yeah, it would be suppliers that we had, and we talked about multiple suppliers. You know, was really around several different raw materials that we source. Several, so it's a wider issue than CO. You know, we're not talking about the specific materials, Jeff. I mean, at the end of the day, we talked about acetic acid, and we buy several different raw materials for that.

Jeff Zekauskas: Uh huh.

Speaker Change: The outages.

Speaker Change: Clear Lake.

Jeff Zekauskas: Caused by anything else other than carbon monoxide difficulties was there some other source of inefficiency in the quarter.

Diego: Yeah.

Scott Richardson: Yeah, thanks for the question, Jeff. Yeah, with the suppliers that we have, and we've talked about multiple suppliers, you know, it was really around several different raw materials that we use.

Speaker Change: Yeah. Thanks for the question, Jeff, Yes, with the suppliers that we have and we've talked about multiple suppliers.

Diego: It was really around several different raw materials that we source.

Scott Richardson: So it's a wider issue than

Speaker Change: Several of us so it's a wider tissue than Seattle.

Scott Richardson: You know, we're not talking about specific materials, Jeff. I mean, at the end of the day, we talked about acetic acid, and we bought several different raw materials.

Speaker Change: Yeah, we're not talking about this specific materials Jeff.

Speaker Change: At the end of the day, we talked about acetic acid and we by several different raw materials for that.

Scott Richardson: And then, secondly, um... Can you talk about your preference as to whether you would sell acetic acid or you would sell VAM in the current environment? How can you compare the profitability of those two chemical outputs?

Jeffrey Zekauskas: And then secondly, can you talk about your preference as to whether you would sell acetic acid, or you would sell them in the current environment? How can you compare the profitability of those two chemical outputs? Yeah, honestly, Jeff, it really does fluctuate week to week, region to region. And, you know, we are looking at kind of where the different markets are at and kind of where they're trending based upon kind of where the fundamentals, supply-demand dynamics are. And, you know, that is going to be kind of one way in one geography for the first part of a quarter, and maybe a little different.

Diego: And then secondly.

Speaker Change: Can you talk about.

Jeff: Your preference as to whether you would sell acetic acid or you would sell fam in the current environment. How is the how can you compare the profitability of those two chemical outputs.

Scott Richardson: Yeah, honestly, Jeff.

Scott Richardson: Yeah, honestly, Jeff, it really does fluctuate week to week, region to region. And, you know, we are looking at kind of where the different, you know, markets are at and kind of where they're trending, based upon kind of where the fundamental supply demand dynamics are. And, you know, that is, is going to be kind of one way in in one geography, for the first part of a quarter, and, and maybe a little different, I would say, in general, we tend to be pivoting more, as we talked about last quarter, in Asia, more further downstream, we've seen more opportunities in our emulsions, as well as our redispersible powder business, to be able to grow in some of those areas, we talked in the prepared comments about some of the out of kind substitution that we've been successful driving there with the expanded capacities that we have.

Diego: Yes, honestly, Jeff It really does fluctuate week to week region to region and we are looking at kind of where the difference.

Speaker Change: Markets are asking kind of where they're trending based upon kind of where the fundamental supply demand dynamics are in that is going to be kind of one way in one geography for the first part of the quarter end and maybe a little different I would say in general we tend to be pivoting more.

Scott Richardson: I would say, in general, we tend to be pivoting more, as we talked about last quarter in Asia, more further downstream. We see more opportunities in our emulsions as well as our redispersible powder system to be able to grow in some of those areas. We've talked in prepared comments about some of the out of kind substitution that we've been successful driving there with the expanded capacities that we have. In addition, with those expanded capacities, we've been able to really work with our customers in India specifically to kind of help develop that market and really start to drive there.

Scott Richardson: In addition, with those expanded capacities, we've been able to really work with our customers in India, specifically, to kind of help develop that market and really start to grow there. So that has been a nice growth area for us more on the Asian side, and I would say it's a little more balanced than where we're selling in the West.

Speaker Change: As we talked about last quarter in Asia more further downstream, we see more opportunities.

Speaker Change: In our emulsions as well as our readers first of all patterns business to be able to grow in some of those areas. We've talked in the prepared comments about some of the out of kind substitution that we've been successful driving there with the expanded capacities that we have in addition, with those expanded capacity if we'd been able to really work.

Speaker Change: With our customers in India, specifically to kind of help develop that market and really start to drive there. So that has been a nice growth area for us more on the Asia side I would say, it's a little more balanced somewhere we're selling in the western hemisphere.

Scott Richardson: So that has been a nice growth area for us, more on the Asia side.

Unknown Executive: And, I would say it's a little more balanced on where we're selling in the Western Hemisphere. Great.

Speaker Change: Great. Thank you.

Speaker Change: Yeah.

Ghansham Panjabi: Our next question comes from Ghansham Panjabi, with beard. Please stay a question. Hey guys, good morning. Lori, I just want to go back to my usual question on the sort of the macro pulse. You know, obviously, your volumes have been weak for several quarters, but just based on your sense as we spin around the world. Do you feel like the macro is relatively stable on a consolidated basis, or is it just your own initiatives that are masking, you know, what is otherwise a sequential deceleration? And I'm just asking because obviously the data in China is very poor. Commodity prices have pulled back, including oil, et cetera, more recently.

Operator: Our next question comes from Ghansham Panjabi with Baird. Please state your question.

Speaker Change: Our next question comes from Ghansham Panjabi with Baird. Please state your question.

Ghansham Panjabi: Hey guys, good morning. Lori, I just want to go back to my usual question on the sort of macro pulse. You know, obviously, your volumes have been weak for several quarters, but just based on your sense as we spin around the world, do you feel like the macro is relatively stable on a consolidated basis, or is it just your own initiatives that are masking, you know, what is otherwise a sequential deceleration? And I'm just asking because, obviously, the data in China is very poor, commodity prices have pulled back, including oil, e So, on a real-time basis, what are you seeing?

Ghansham Panjabi: Hey, guys. Good morning, Laurie I just wanted to go back to my usual question on the sort of the macro.

Ghansham Panjabi: Obviously your volumes have been weak for several quarters, but just based on your sense as we spin around the world do you feel like the macro is relatively stable on a consolidated basis or is it just your own initiatives that are masking what is otherwise a sequential deceleration and I'm just asking because obviously the data in China is very poor.

Speaker Change: Commodity prices have pulled back including oil et cetera, more recently, so on a real time basis, what what are you seeing.

Lori Ryerkerk: So, on a real-time basis, what are you seeing? On a real-time basis, Ghansham, I would say stable is the right word. You know, again, I'm going back to auto. Auto actually has been a little stronger in the US and Asia. Europe has weakened year on year. But globally, auto has been pretty stable and, you know, we do see, especially in China, some further strengthening in the second half. You know, consumer and electronics, again, pretty stable globally, but in our own portfolio because of what we've been able to do through the project pipeline and, you know, the good work by our teams on the ground, you know, we are starting to see some growth in consumer and electronics.

Lori Ryerkerk: On a real-time basis, Ghansham, I would say stable is the right word. You know, again, I'll go back to auto.

Speaker Change: On a real time basis Ghansham I would say stable is the right word you know again I go back to auto auto actually it's been a little stronger in the U S and Asia Europe has weakened year on year like globally auto had been pretty stable and you know, we do see especially in China. Some further.

Lori Ryerkerk: The auto industry actually has been a little stronger in the U.S. and Asia, but Europe has weakened year on year. But globally, the auto industry has been pretty stable. And, you know, we do see, especially in China, some further strengthening in the second half. You know, consumer and electronics, again, pretty stable globally. In our own portfolio, because of what we've been able to do through the project pipeline and, you know, the good work by our teams on the ground, we are starting to see some growth in consumer electronics.

Speaker Change: Strengthening.

Speaker Change: In the second half you know consumer and electronics again pretty stable globally, but in our own owned portfolio because of what we've been able to do the project pipeline and you know the good work by our teams on the ground. We are starting to see some growth in consumer and electronics, we had strong Q on Q growth in medical.

Lori Ryerkerk: We've had strong Q on Q growth in medical implants, which is a little bit, you know, unique to us and as expected. And, you know, we really are not seeing de-stocking. The cadence and consistency of orders, you know, continues to improve. We've got a few percent growth from that. And, you know, really, I would call the market stable, but we're starting to see a little bit of volume growth in engineering materials anyway, just because of the project pipeline and the revenue synergies, et cetera.

Lori Ryerkerk: We've had strong Q-on-to growth in medical implants, which is a little bit, you know, unique to us and as expected. And, you know, we really are not seeing de-stocking; you know, the cadence and consistency of orders. You know, it continues to improve. We've got a few percent growth from that. And, you know, really, I would say overall, I call the market stable, but we're starting to see a little bit of volume growth in engineering materials anyway, just because of the project pipeline and the revenue synergies, etc. I think you can ask until, you know, again, stable is the right word.

Speaker Change: Implants.

Speaker Change: Which is a little bit you know unique to us and as expected and we really are not seen destocking the cadence and consistency of over of orders are you know it continues to improve we got a few percent growth from that and you know really I would say overall I call the market's stable but.

Speaker Change: We're starting to see a little bit of volume growth in engineered materials anyway, just because of the project pipeline and the revenue synergies et cetera, I think it adds until you know.

Lori Ryerkerk: I think in asset sales, you know, Again, stable is the right word. It is stable for construction, paints, and coatings, specifically that sector, at a very low rate. And, you know, we thought we'd start to see some seasonal uptick there. We have not seen that in the second quarter, and we're not anticipating it now for the third quarter as well.

Speaker Change: Again stable is the right word it is just it's stable for construction paints and coatings specifically that sector.

Lori Ryerkerk: It is just, it is stable for construction, paints and coating specifically that sector at a very low rate. And, you know, we thought we start to see some seasonal uptake there. We have not seen that in the second quarter, and we're not anticipating it now for the third quarter as well. And I think that's true for all regions. You know, but to put it in perspective, you know, for the company as a whole, I'd say you remind you that, you know, 25 percent of what we make is auto. And auto has been stable to slightly up this year.

Speaker Change: At a very low rate and you know we thought we'd start to see some seasonal uptick there we have not seen that in the second quarter and we're not anticipating it now for the third quarter as well and I think that that's true for all regions.

Lori Ryerkerk: And I think that's true for all regions. You know, but to put it in perspective, you know, for the company as a whole, I say, remind you that, you know, 25% of what we make is cars, and car sales have been stable to slightly up this year; everything else is, you know, less than that. So we're really seeing the value, I think, in our portfolio of the diversity of our portfolio and the ability that it has to help us stabilize earnings and find pockets of improved earnings.

Speaker Change: But to put in perspective for.

Speaker Change: For the company as a whole I remind you that you know 25% of what we make is auto and auto has been stable to slightly up this year everything else is less than that so we're really seeing the value I think in our portfolio of the diversity of our portfolio.

Lori Ryerkerk: Everything else is, you know, less than that. So we're really seeing the value, I think, in our portfolio of the diversity of our portfolio and the ability that has to help us stabilize our needs and buying pockets of improvement.

Speaker Change: And the ability that has to help us stabilize earnings and buying pockets of improvement.

Scott Richardson: Okay, fantastic. And then for my second question, in terms of free cash flow, I mean, you guys have, you know, been very efficient in pulling levers to kind of protect free cash flow throughout this challenging volume environment. Is there anything for 2025 that we need to keep in mind as relates to the bridge, you know, 24 versus 25, that you're benefiting from this year that may not repeat next year? Thank you. I would say, actually, there are a couple of things in our components of our free cash flow in 25, which will get better. It was a very heavy year for cash taxes.

Ghansham Panjabi: Okay, fantastic. And then for my second question, in terms of free cash flow, I mean, you guys have, you know, been very efficient in pulling levers to kind of protect free cash flow throughout this challenging volume environment. Is there anything for 2025 that we need to keep in mind as it relates to the bridge, you know, 24 versus 25, that you're benefiting from this year that may not repeat next year?

Speaker Change: Okay Fantastic and then for my second question in terms of free cash flow. I mean, you guys have been very efficient and pulling levers too.

Speaker Change: Protect free cash flow throughout this.

Speaker Change: The challenging volume environment is there anything for 2025 that we need to keep in mind as it relates to the bridge 24 versus 25.

Speaker Change: Thank you you are benefiting from this year that may not repeat next year.

Speaker Change: Thank you I'll take that.

Chuck Kyrish: Yeah, Ghansham, you know, I would say actually, there are a couple of things in our components of our free cash flow in 25, which will get better. It's a very heavy year for cash tax, as I've tried to talk about a lot and explain, cash tax will be significantly lower next year, and our cash interest will continue to drive lower next year as we pay off our debt. I don't see our CAPEX Unknown Executive, Salvator Tiano, Ghansham Panjabi, Chuck Kyrish, Celanese Corp.

Speaker Change: Yeah, Ghansham I would say actually there are a couple of things in our components of our free cash flow in 25, which will get better.

Speaker Change: It was a very heavy year for cash taxes, I've tried to talk about a lot and explain cash tax will be significantly lower next year, but cash interest will continue to drive lower next year as we.

Scott Richardson: I've tried to talk about a lot and explain. Cash tax will be significantly lower next year. Our cash interest will continue to drive lower next year as we pay off our debt. I don't see our CapEx changing materially while we're here in our de-leveraging phase, right? So we've done a lot of work on our inventories as well. So there's actually a few things next year that we built in cash positives versus 2024.

Speaker Change: They'll pay off our debt.

Speaker Change: I don't see our Capex.

Speaker Change: Changing materially while we're hearing our deleveraging phase right. So we've done a lot of work on our inventories as well so theres actually a few things next year that will be built in a cash positive versus 2024.

Ghansham Panjabi: Okay, thanks so much.

Unknown Executive: Okay.

Speaker Change: Okay. Thanks, so much.

Unknown Executive: Thanks so much.

Arun Viswanathan: Thank you, and our next question comes from Arun Viswanathan, with RBC Capital Markets. Please state your question. Great, thanks for taking my question. So, just going back to that force reserve comment. So, sounds like maybe 4G to 45 for the full year, which is maybe around 35 cents or so on the EPI.

Operator: Thank you. And our next question comes from Arun Viswanathan with RBC Capital Markets. Please state your question.

Speaker Change: Thank you and our next question comes from Arun Viswanathan with RBC capital markets. Please state your question.

Arun Viswanathan: Great, thanks for taking my question. So just going back to that force majeure comment, sounds like 30, maybe 40 to 45 for the full year, which may be around $0.35 or so on the EPS line. So if you think about the reduction, the remaining reduction may be $0.65 at the midpoint. How do you think about that between price and volume and any other factors, I guess, driving that reduction?

Arun Viswanathan: Great. Thanks for taking my question, so I'm, just going back to the force majeure comments so.

Speaker Change: Sounds like.

Speaker Change: 30, maybe 40% 45 for the.

Speaker Change: The full year, which is.

Speaker Change: Maybe around 35 or so on the EPS line.

Scott Richardson: So, if you think about the reduction, the remaining reduction maybe 65 cents at the midpoint, how do you think about that between price and volume and any other factors, I guess, driving that to reduction? Yeah, I would think about it really in 4 buckets. You know, so the first bucket is what you called out, the 45 million or so, or associated with our supplier issues this year. You know, there's probably another 40 million on top of that of Clear Lake productivity because of the timing of when all this happened, relative to our startup, etc. That 100 million of productivity won't get there; there's about 40 more of that.

Speaker Change: You'd think about the reduction the remaining reduction maybe 65 cents at the midpoint. How did you think about that between price and volume in many any other factors I guess are driving that.

Speaker Change: Production.

Chuck Kyrish: Yeah, I would think about it really in four buckets. You know, so the first bucket is what you called out the 45 million or so associated with our supplier issues this year. You know, there's probably another 40 million on top of that of Clear Lake productivity because of the timing of when all this happened relative to our startup, etc. That 100 million of productivity we won't get there; there are about 40 more of that.

Speaker Change: Yeah, I would think about it really in.

Speaker Change: In four buckets.

Speaker Change: You know so the first bucket is where you called out the $45 million or so associated with our supplier issues. This year.

Speaker Change: Probably another $40 million on top of that of a clear like productivity because of the timing of when all this happened relative to our startup et cetera that are that 100 billion of productivity. We won't get there is about 40 more of that so that's about half of that of that step up that we would expect have expected it to get to a foundational or.

Chuck Kyrish: So you know, that's about half of that step up that we would have expected to get to foundational earnings or take for that dollar, and then you know, the other part of that. Sorry, I'm thinking about 25. Let me back up.

Scott Richardson: So, you know, that's about half of that step up that we would have expected to get to foundational earnings for that dollar.

Speaker Change: <unk>.

Speaker Change: It probably isn't that bottler and then you know.

Scott Richardson: And then, you know, the other part of that, sorry, I'm thinking about 25. Let me back up. So, for your question, which is really about the dollar, we went down. You know, again, it's the same, but so we have about nearly half of it is coming from that. Then we have, I say, you know, the issues we're having around construction, paints, and coatings. And it's really more there, a question of margins in the asset deal business. And then on the EM side, which is the third bucket, it is really the question of what are we able to pull through on raw materials because, as we've talked about, with palm margins being compressed and nylon margins being compressed, but one because raw materials, one because of pricing. You know, we had said we may get as much as 150 pull through in a lower raw materials.

Chuck Kyrish: So for your question, which is really about the dollar we went down, you know, again, it's the same, but so we have about nearly half of it coming from that. Then we have, I say, you know, the issues we're having around construction, paints, and coatings, and it's really more they're a question of margins in the acetyl business. And then on the EM side, which is the third bucket, it is really the question of what are we able to pull through on raw materials?

Speaker Change: The other part of that I'm, sorry, I'm thinking about 25, let me back up so for your question, which is really about the dollar we went down.

Speaker Change: It's the same but so we have about nearly half of it is coming from that then we have I'd say you know the issues, we're having around construction in paints and coatings and it's really more there a question of of margins I'm in the acetyl business.

Speaker Change: And then on the EM side, which is the third bucket is really the question of <unk>.

Chuck Kyrish: Because, as we've talked about with POM, margins being compressed, and nylon margins being compressed, but one because of raw materials, one because of pricing. You know, we had said we may get as much as 150 pull through in lower raw materials, but we're probably only going to get about half of that. So I would think about it that way.

Speaker Change: What are we able to pull through on raw materials, because as we've talked about with palm margins being compressed and nylon margins being compressed, but one because of raw materials. One because of pricing. We had said we may get as much of 150 pull through in our lower raw materials, we're probably only going to.

Scott Richardson: We're probably only going to get about half of that this year.

Speaker Change: About half of that this year, so I would think about it that way.

Scott Richardson: So, I would think about it that way. Okay, that's very helpful. And I guess you're answering my other question there a little bit as well.

Arun Viswanathan: Okay, that's very helpful. And I guess you're answering my other question there a little bit as well. So just as you think about 25, then which of those factors kind of come back to you? It sounds like maybe half of that. And then, on top of that, how much do you expect from synergies and deleveraging as you look into 25? Thanks.

Speaker Change: Okay, that's very helpful and.

Speaker Change: Yes, Youre answering my right my other questions.

Speaker Change: They're a little bit as well. So just as you think about 25, then which of those factors kind of come back to you. It sounds like maybe half of that and then on top of that how much do you expect from synergies and deleveraging.

Scott Richardson: So, just as you think about 25, then which of those factors kind of come back to you. It sounds like maybe half of that. And then on top of that, how much do you expect from synergies and de-leveraging as you look into 25? Thanks. Yeah, so when you think about 25, you know, as I said, you know, the runway we see in the second half, I think is a good indicator as a base for 25. And then you think about, you know, we also, of course, in the second half, we will get the majority of that, a clear like supplier issues will be cleared off.

Speaker Change: As you look into 'twenty five thanks.

Lori Ryerkerk: Yeah, so when you think about 25, as I said, the runway we see in the second half, I think is a good indicator as a base for 25. And then you think about, you know, we also, of course, in the second half, we will get the majority of that clear lake supplier issues cleared off, and we'll start getting some more productivity. So if you look forward, I would think about synergies. We will definitely have a good triumph of synergies next year, similar to what we had this year and last year. And then we should have a little bit of additional help from turnarounds as well. And then, of course, we have some additional help from interest rates.

Speaker Change: Yeah. So when you think about 25, you know as I said you know the runway we see in the second half I think is a good indicator as a base for 25 and then you think about you know we also of course in the second half we will get the majority of that.

Speaker Change: A clear like supplier issues will been cleared off we'll start getting some more productivity. So if you look forward I would think about synergies we will definitely have a good time for synergies next year similar to what we've had this year of last year.

Scott Richardson: We'll start getting some more productivity. So, if you look forward, I would think about synergies. You know, we will definitely have a good time to synergies next year, similar to what we've had this year and last year. And then, you know, we should have a little bit of additional help from turnarounds as well.

Speaker Change: And then.

Speaker Change: We should have we should have a little bit of additional help from turnarounds as well.

Scott Richardson: and then, of course, we have some additional help from interest rates.

Speaker Change: And then of course, we have some additional help from interest rates.

Speaker Change: Thanks.

Operator: Our next question comes from Vincent Andrews with Morgan Stanley. Please state your question.

Vincent Andrews: Our next question comes from Vincent Andrews with Morgan Stanley. Please say your question. Thank you. Lori, could I ask you on the Ace of Tilt chain, you know, you noted that the Clear Lake Outage, I think you said was the biggest one you've had in 15 years, and obviously it didn't lead to the market improving. So, as you bring Clear Lake back up, are you making any adjustments to production anywhere else, or do you think that the market's going to be able to absorb the resumption of production even as we kind of come out of what usually is the seasonally stronger period of the year?

Speaker Change: Our next question comes from Vincent Andrews with Morgan Stanley. Please state your question.

Vincent Andrews: Lori, can I ask you, on the Asatil chain, you noted that the Clear Lake outage, I think you said, was the biggest one you've had in 15 years, and obviously, it didn't lead to the market improving. So, as you bring Clear Lake back up, are you making any adjustments to production anywhere else, or do you think that the market's going to be able to absorb the resumption of production, even as we kind of come out of what usually is a seasonally strong period?

Vincent Andrews: Thank you Laurie can I ask you on the acetyl chain you noted that the clear Lake outage I think you said it was the biggest one you've had 15 years and obviously it didn't lead to the market improving so as you bring clear lake back up.

Speaker Change: Are you, making any adjustments to production anywhere else or do you think that the market's going to be able to absorb the resumption of production even as we kind of come out of what usually is the seasonally stronger period of the year.

Lori Ryerkerk: You know, Vincent, it's hard to say. I mean, we make adjustments all the time to our production, and, you know, so we'll continue to look at that. I mean, it's a call that happens daily just about in the Advatil teams. This is what we should be making, where based on where the markets are going. So I, you know, I don't see this necessarily changing at your right. We didn't see much price response with it shut down or, you know, with the loss of production during that time, but I think that just reflects how really weak the demand environment is for construction and coding.

Lori Ryerkerk: You know, Vincent, it's hard to say. I mean, we make adjustments all the time to our production. And, you know, so we'll continue to look at that. I mean, it's a call that happens daily, just about in the appetite teams, what we should be making based on where the markets are going. So I don't see this necessarily changing it. You're right, we didn't see much price response with it shut down or with the loss of production during that time, but I think that just reflects how really weak the demand environment is for constructions and coatings.

Speaker Change: It's a it's hard to say I mean, we make adjustments all the time to our production and yeah. So we'll continue.

Speaker Change: When you look at that I mean, it's it's a call that happens daily just about in the acetyl teams, what we should be making where based on on where the markets are going.

Speaker Change: So I don't see that necessarily changing that you're right. We didn't see much price responds with it shut down.

Speaker Change: Our you know with the loss of production during that time, but I think that just reflects how really weak the demand environment is for constructions and coding.

Lori Ryerkerk: Yeah, I mean, how I would add to that, Vincent, it's kind of going back to what we talked about earlier, is that we're constantly looking at matching rates with where that demand is and where we can maximize that, really, on a weekly and monthly basis. And, you know, assuming that we are able to get back the key raw materials where we had multiple suppliers that had issues with that, then it's going to give us the ability to have that optionality to kind of operate the chain as we normally do.

Scott Richardson: Yeah, I mean, how I would add to that, Vincent, it's kind of going back to what we talked about earlier. We're constantly looking at matching rates with where that demand is and where we can maximize that really on a weekly and monthly basis. And, you know, assuming that we are able to get back the key raw materials where we have multiple suppliers that had issues on that, then it's going to give us the ability to have that optionality to kind of operate the chain as we normally do. And so, you know, we're rebuilding our inventory now and getting that flexibility back and getting all to get that flex, which is just going to kind of depend, you know, kind of where things are from month to month.

Speaker Change: Yes.

Speaker Change: I would add to that Vince it's kind of going back to what we talked about earlier is we're constantly looking at matching rates.

Vince: With where that demand is and where we can maximize that really on a weekly and monthly basis.

Speaker Change: Assuming that we are able to get back the the key raw materials, where we had multiple suppliers that had issues on that.

Speaker Change: Kind of give us the ability to have that optionality to kind of operate the chain as we normally do so.

Speaker Change: We're rebuilding our inventories now and getting that flexibility back in to be able to get that flat, which is just going to kind of depend.

Speaker Change: You know kind of where things are from month to month.

Vincent Andrews: And then if I can just follow up on also in the repair remarks, you made some comments, Laurie, about the new assets in China that have started up and that, you know, obviously that's incremental supply that hasn't been absorbed, but what I was trying to square was you said that that supply seems to have stayed largely in Asia and that European export or experts of Europe or down are down 40% over the last 12 months. So, I just wanted to understand, is that saying that, you know, that excess product that's come out of those Chinese facilities is just sort of weighing on only on the Asian market, but they've also actually taken product out of Europe or I just didn't understand why the European exports had come down.

Vincent Andrews: And if I could just follow up, also in the prepared remarks, you made some comments, Lori, about the new assets in China that have started up and that, you know, obviously, that's incremental supply that hasn't been absorbed. But what I was trying to square was you said that supply seems to have stayed largely in Asia and that European exports, or exports to Europe, are down, are down 40% over the last 12 months.

Speaker Change: And then if I could just follow up also in the prepared remarks, you made some comments worried about.

Speaker Change: The new assets in China.

Speaker Change: But that have started up and obviously that's incremental supply that that hasn't been absorbed but what I was trying to square was.

Speaker Change: You said that the that supply seems to have stayed largely in Asia and European exports or exports in Europe are down are down 40%.

Speaker Change: Over the last 12 months so.

Speaker Change: Just wanted to understand is that saying that you know.

Vincent Andrews: So I just wanted to understand is that saying that, you know, That excess product that's come out of those Chinese facilities is just sort of weighing on only the Asian market, but they've also actually taken product out of Europe. Or I just didn't understand why European exports had come down.

Speaker Change: That excess product thats coming out of the Chinese facilities is just sort of weighing on only on the Asian market, but they are also actually taking product out of Europe or I just didn't understand why the European exports should come down.

Lori Ryerkerk: Yeah, I think if you just look at the low margins that are associated right now, I mean, you know, China has been basically at the cost curve. So all those these new units have started up and they may be slightly advantage, you know, that that given the low demand in China, especially in some of the areas like instruction, but also EVA where we've seen quite a downturn here recently. You know, that material, quite frankly, it's more affordable for them to ship it and put it in other parts of Asia than necessarily to get it to China.

Lori Ryerkerk: Yeah, I think if you just look at the low margins that are associated right now, I mean, you know, China has been basically on the cost curve. So although these new units have started up, and they may be slightly advantaged, you know, given the low demand in China, especially in some of the areas like construction, but also EBA, where we've seen quite a downturn here recently, that material, quite frankly, it's more affordable for them to ship it and put it in other parts of Asia than necessarily to get it to China. So I think it's the economics of taking that demand into Asia, which has left, you know, the channel to Europe more to the US. That makes sense.

Speaker Change: Yeah, I think if you just look at the low margins that are associated right now.

Speaker Change: It has been basically at the cost curve. So all those the new units has started up and they may be slightly advantaged.

Speaker Change: That given the low demand in China, especially in some of the areas like construction, but also EMEA, where we've seen quite a downturn here recently.

Speaker Change: That material quite frankly, it's more affordable for them to ship it and put it in in other parts of Asia than necessarily to get it to China. So I think it's the economics of taking that demand into Asia, which has left the channel to Europe are more to the U S.

Lori Ryerkerk: So I think it's the economics of taking that demand into Asia, which has left, you know, the channel to Europe more to the US.

Vincent Andrews: Okay, that makes sense. Thanks very much for the clarification.

Unknown Executive: Okay, that makes sense. Thanks very much for the clarity.

Speaker Change: Okay that makes sense, thanks, very much for clarity.

Speaker Change: Okay.

Operator: Our next question comes from Kevin McCarthy, Vertical Research Partners. Please state your question.

Speaker Change: Yeah.

Matt Hatt: Our next question comes from Kevin McCarthy, Vertical Research Partners. Please state your question. Hi, this is Matt Hatt. We're on for Kevin McCarthy, and the prepared remarks you mentioned the potential for targeted divestiture opportunities on the same scale as food ingredients. Would you consider looking at your other jabies there, maybe something along the lines of the Fairway methodology?

Speaker Change: Our next question comes from Kevin Mccarthy Vertical research partners. Please state your question.

Kevin Mccarthy: Hi, this is Matt Hett. We're on for Kevin McCarthy.

Matt: Hi, This is Matt on for Kevin Mccarthy I'm in the prepared remarks, you mentioned the potential for <unk>.

Lori Ryerkerk: In the prepared remarks, you mentioned the potential for targeted divestiture opportunities on the same scale as food ingredients. Would you consider looking at your other JVs there? Maybe something along the lines of fairway methanology?

Speaker Change: Targeted divestiture opportunities on the same scale as food ingredients.

Speaker Change: You consider looking at your other JV is there.

Speaker Change: Maybe something along the lines of the fairway methanol JV.

Lori Ryerkerk: Yeah, look, Matt, I would just say, you know, we really never come in on what specific assets are processes that we are in. We are actively working on multiple opportunities now on various assets. We've always been very clear that if our assets are worth more to someone else than they are to us, you know, we are open to look at divestment and, you know, and of course the timing of that is unpredictable.

Lori Ryerkerk: Yeah, look, man. I would just say, you know, we really never comment on what specific assets or processes that we're in. We are actively working on multiple opportunities now on various assets. We've always been very clear that if our assets are worth more to someone else than they are to us, we are open to looking at divestment. And, you know, and of course, the timing of that is unpredictable.

Speaker Change: Yeah, Matt I would just say you know, we really never comment on what specific assets or processes that were in we are actively working multiple opportunities now on various asset we've always been very clear that if our assets are worth more to someone else than they are to.

Speaker Change: You know we are open to look at divestment and.

Speaker Change: And of course, the timing of that is unpredictable. So I can't comment on any any specifics yeah. The only thing I'd add is we have stated that we do like having an integration and methanol somewhere between about 40 and 50% of our total needs and we think that gives us kind of a nice balance from being in the market much like we.

Chuck Kyrish: So I can't comment on any specifics. Yeah, the only I'd add is we have stated that we do like having an integration in methanol somewhere between about 40 and 50% of our total needs, and we think that gives us, you know, kind of a nice balance from being in the market, much like we, you know, articulated, we're just now doing with nylon. We like being able to buy and make a little bit and be in the market for a portion of that. For methanol, you know, we can consistently read, look at what that right balance is, and we've landed right in that kind of 40 to 50%, right?

Chuck Kyrish: So I can't comment on anything specific. Yeah, the only thing I'd add is we have stated that we do like having an integration in methanol, somewhere between about 40 and 50% of our total needs. And we think that gives us, you know, kind of a nice balance from being in the market, much like we, you know, articulated, what we're now doing with nylon. We like being able to buy and make a little bit and be in the market for a portion of that. For methanol, you know, we consistently, consistently relook at what that right balance is. And we've landed right in that kind of 40.

Speaker Change: You know articulated we're now doing with nine one we like being able to buy and make a little bit and be in the market for a portion of that for methanol. We consistently consistently re look at what that right balance is and we've landed right in that kind of 40% 50%.

Unknown Executive: Okay, thank you.

Kevin Mccarthy: Okay, thank you. And then just a quick one. You paid down $500 million in debt in the second quarter. You're looking at another $500 million in the third. How do you expect that to trend in the fourth quarter?

Speaker Change: Okay. Thank you and then just a quick one you paid down 500.

Unknown Executive: And then just a quick one: you pay down 500, excuse me, 500 million in debt in the second quarter; you're looking at another 500 million in the third.

Speaker Change: Excuse me $500 million of debt in the second quarter looking at another $500 million in the third.

Scott Richardson: How do you expect us to trend in the fourth quarter? Are you talking interest expense? Yeah, I would, you know, there's some moving parts in there. There's some short-term revolver draw and there is the debt pay down. When you look at it, some of those bonds that we're paying down have really low coupons. One of the materials will swap down to 1%; at the same time, you've got cash that you're using to pay that down. That's actually making really good rate. So I do expect a decline in interest, a slight decline in the second half of the year.

Speaker Change: I would expect that to trend in the fourth quarter.

Chuck Kyrish: Are you talking about interest expense? Yes.

Speaker Change: You're talking interest expense.

Speaker Change: Oh, yes, yes.

Chuck Kyrish: Yeah, I would, you know, there's some moving parts in there. There's some short-term revolver draw, and there is there is the debt pay down when you look at it. Some of those bonds that we're paying down have really low coupons; one of the maturities will swap down to 1%. At the same time, you've got cash that you're using to pay that down, and it's actually paying really good rates. So I do expect a decline in interest, a slight decline in the second half of the year, I'd say, in both Q3 and Q4.

Speaker Change: I would there's some moving parts in there there is some short term revolver draw and there is there is the debt pay down when you look at it some of those bonds that we're paying down.

Speaker Change: A really low coupons into the maturities were swapped down to 1% at the same time, you've got cash that youre using to pay that down that's actually making really good rates. So I do expect a decline in interest as a slight decline in the second half of the year I'd say in both Q3 and Q4.

Scott Richardson: I'd say in both Q3 and Q4, the interest expense on a net basis should be a few million lower than you see in Q2.

Speaker Change: The interest expense on a net basis should be a few million dollars lower than you see in Q2.

Speaker Change: Thank you.

Speaker Change: Yeah.

Aleksey Yefremov: Our next question comes from Alexei Yefremoff with KeyBank Capital Markets.

Operator: Our next question comes from Aleksey Yefremov with KeyBank Capital Markets. Please state your question.

Speaker Change: Our next question comes from a let's say yeah from off with Keybanc capital markets. Please state your question.

Aleksey Yefremov: Please stay a question. Thanks. Good morning.

Aleksey Yefremov: Thanks. Good morning. In your prepared remarks, you talk about an expansion between price and raw materials and EM in the third quarter. Do you need to raise prices to achieve that or is it due to cheaper layers of raw materials inventory?

Speaker Change: Thanks, Good morning in your prepared remarks, you talk about expansion between pricing and raw materials.

Aleksey Yefremov: In your prepared remarks, we talk about expansion between pricing or materials in EM in the third quarter. Do you need to raise prices to choose that, or it raises due to cheaper layers of raw materials in EM. Alexei, our focus is really on kind of controlling the things that we can control, as Laurie mentioned earlier, and launching new projects from our pipeline model. As Laurie mentioned, we are assuming very similar landscape in Q3 overall to what we saw in Q2. So we're not necessarily baking that in to our base. It really is about the raw materials flowing through, and also as we launch new projects and new opportunities, getting a mix-up lift from that.

Speaker Change: In the third quarter.

Speaker Change: You need to raise prices to achieve that or resist due to cheaper layers of raw material inventories.

Scott Richardson: Aleksey, our focus is really on kind of controlling the things that we can control, as Lori mentioned earlier, and launching new projects from our five. As Lori mentioned, we are assuming a very similar landscape in Q3 overall to what we saw in Q2. So we're not necessarily baking that in to our base. It really is about the raw materials flowing through and also as we launch new projects and new opportunities, getting a mix-up list from that. So I see that being a larger portion of March.

Alexia: Alexia are our focus is really on kind of controlling the things that we can control as Lori mentioned earlier and launching new projects from our pipeline model as Lori mentioned, we are assuming very similar landscape in Q3 overall for what we saw in Q2, so we're not necessarily.

Speaker Change: Taking that in to our base. It really is about the raw materials flowing through and also as we launch new projects and new opportunities getting a mix uplift from that so I see that being the larger portion of margin expansion.

Aleksey Yefremov: So I see that being the larger portion of March. Thank you.

Unknown Executive: Very helpful.

Aleksey Yefremov: Very helpful. Thank you. And on Clear Lake expansion, can you just clarify how much do you expect it to contribute this year to your EBIT, you know, given all the challenges in total versus your $100 million target? And then how much can we expect next year, assuming the margin picture does not change?

Speaker Change: Very helpful. Thank you and on clear Lake expansion can you just clarify how much do you expect it.

Scott Richardson: Thank you. And on clearly expansion, do you just clarify how much do you expect it to contribute this year to your EBIT, you know, given all which challenges in total versus your 100 million target. And then how much can we expect next year, assuming the margin picture does not change? Yeah, look, I like the way I would expect about half, roughly this year, and then, you know, the other half next year, in addition.

Speaker Change: To contribute this year to your EBIT it given all the challenges in total versus your $100 million target in and then how much can we expect next year, assuming the margin picture does not change.

Lori Ryerkerk: Yeah, look, Aleksey, I would expect about half of them roughly this year. And then, you know, the other half. Thanks a lot, Lori.

Speaker Change: Yeah.

Speaker Change: Look I like the I would expect about half roughly this year and then you know the other half next year.

Speaker Change: In addition.

Lori Ryerkerk: Thanks a lot, Larry.

Unknown Executive: Thanks, Lutler.

Speaker Change: Thanks, a lot lower.

Operator: Thank you, and our next question comes from Frank Mitsch with Fermium Research. Please state your question.

Speaker Change: Thank you and our next question comes from Matt Frank Mitsch with.

Unknown Executive: And our next question comes from Max Frank, Miss with Fermium Research. Please do your question. Hi, good morning. It's Suzanne for Frank.

Speaker Change: Permian Research. Please state your question.

Frank Mitsch: Hi, good morning. This is Yuzan for Frank.

Speaker Change: Hi, good morning, since he is on for Frank.

Unknown Executive: First question around the lowered capex, you know, that 400 to 450 million range, how much of that is maintenance capex, and I just want to confirm I heard correctly that the early look on 2025 is calling for a similar range. Yeah, what we said in the past is our maintenance right now, most years is going to run between three and 350 million, and then the balance of capital we would spend each year is going to be for productivity and growth, so really kind of the earnings growth piece of it. I would just kind of remind you that, you know, as we said, historically, we have been able to generate a high scene, low 20% return our entire bucket of capital.

Speaker Change:

Speaker Change: First question around the lowered Capex, you know in that $400 million to $415 million range, how much of that is maintenance capex.

Speaker Change: I just want to confirm I heard correctly that the early look on 2025 is calling for a similar range.

Chuck Kyrish: First question around the lowered CapEx, you know, that 400 to 450 million range. How much of that is maintenance CapEx? And I just want to confirm if I heard correctly that the early look at 2025 is calling for a similar range.

Speaker Change: Yes, what we said in the past is our maintenance right now most years who's going to run between three and $350 million and then the balance of capital we would spend each year is going to be for productivity and growth. So really kind of the earnings growth piece of it I would just kind of remind you that you know as we've said historically.

Speaker Change: We have been able to generate a high teens low 20% return our entire bucket of capital so that tends to be we do focus on returns overall on all of our capital, but maintenance is in that $3 million to $350 million.

Scott Richardson: So that tends to be, we do focus on returns overall on all of our capital, but maintenance is in that 3 to 350 range. Got it.

Chuck Kyrish: Yeah, what we said in the past is that our maintenance right now is going to run between three and 350 million. And then the balance of capital we would spend each year is going to be for, you know, productivity and growth. So really kind of the earnings growth piece of it. I would just kind of remind you that, as we said, historically, we have been able to generate a high teens to low 20% return on our entire bucket of capital. So that tends to be we do focus on returns on all of our capital, but maintenance is in that three to 350.

Frank Mitsch: Got it. And, um... I know that the synergies for the first half came in around $40 million. Just curious, you know, what gives you guys the confidence that it will more than double in the second half of the year to reach that $150 million level?

Speaker Change: Got it.

Scott Richardson: And I know that the synergies for the first half came in around for 40 million dollars. Just curious, you know, what gives you guys the confidence that it will more than double in the second half of the year to reach that 150 million level. Yeah, it's really the run rate that we're on and the actions that we've taken. I mean, most of the synergies this year are on the cost side of the equation. There are some revenue synergies, as I alluded to earlier, but it's mainly cost in the actions that we've taken. We made several announcements around our manufacturing footprint.

Speaker Change: And.

Speaker Change: I know that the synergies for the first half came in around four a $40 million mm.

Speaker Change: Just curious.

Speaker Change: What gives you guys the confidence that it will more than double.

Speaker Change: In the second half of the year to reach that $150 million level.

Lori Ryerkerk: Yeah, it's really the run rate that we're on and the actions that we've taken. I mean, most of the synergies this year are on the cost side of the equation. There are some revenue synergies, as I alluded to earlier, but it's mainly cost and the actions that we've taken. We made several announcements around our manufacturing footprint. Those are rolling in. The Uintro facility has been shut down, and we're kind of ramping up, you know, servicing customers from other locations now.

Speaker Change: Yes, it's really the run rate that we're on and the actions that we've taken I mean, most of the synergies this year on the cost side of the equation. There are some revenue synergies as I alluded to earlier.

Speaker Change: Mainly cost and the actions that we've taken we made several announcements around our manufacturing footprint. Those are rolling in the used truck facility has been shut down and we're kind of ramping up.

Scott Richardson: Those are rolling in. The utero facility has been shut down, and we're kind of ramping up, you know, servicing customers from other locations now. We'll have the next site, which will come out of the network here in the fourth quarter. And so, you know, with some of those announcements as well as some of the actions we've taken on the functional side of things, such as implementation of our IT systems on an integrated basis, the benefits of that really were always more second half way than first half way.

Speaker Change: Servicing customers from other locations now will have the next site, which will come out of the network here in the fourth quarter and so with some of those announcements as well as some of the actions we've taken on the functional side of thing such as implementation of our it systems on an integrated basis.

Lori Ryerkerk: We'll have the next site, which will come out of the network here in the fourth quarter. And so, you know, with some of those announcements, as well as some of the actions we've taken on the functional side of things, such as the implementation of our IT systems on an integrated basis, the benefits of that really were always more second half weighted than

Speaker Change: The benefits of that really were always more second half weighted than first half way.

Frank Mitsch: Got it. Thank you, guys.

Speaker Change: Got it thank you guys.

David Begleiter: Our next question comes from David's bag letter with Georgia Bank; please state your questions.

Operator: Our next question comes from David Begleiter with Deutsche Bank. Please state your question.

Speaker Change: Our next question comes from David Begleiter with Deutsche Bank. Please state your question.

David Begleiter: It's David Huang here for Dave. I guess you noted lower level participation in spot activity, both abs, tails, and toe. What percentage did you sell to the spot market before the outage? And I guess how should we think about the ramp of those activities in the second half?

David Begleiter: It's David Hong, your food Dave. I guess you noted lower level participation spot activity, both at sales and toe. What percentage did you sell to the stop market before the outage? And I guess, how should we think about the ramp of those activity in seconds? You know, overall, you know, each product line has a different kind of percentage that's weighted towards spot versus contract, and each region is a little bit different. I would say on the lower percentage that is spot versus contract, most of that business is contract in our other product lines in a seed gap that bam, a motion. For example, it's different by region.

Speaker Change: It's David Wang here for David I guess, you noted lower level of participation by activity, but our sales in tow what percentage did you so to the spot market before the outage and I guess, how should we think about the ramp up those activity in second half.

Scott Richardson: You know, overall, each product line has a different kind of percentage that's weighted towards spot versus contract, and each region is a little bit different. I would say on the acetate tow side of things, things are a little lower percentage that is spot versus contract; most of that business is contract. In our other product lines, acetic acid, BAM, emulsions, for example, it's different by region. And so I think just with the constraints that we had, due to some of the supplier outages, you know, we just didn't have the same flexibility that we typically do to be able to flex our value chain in the Western Hemisphere, which limited some of the

Speaker Change: Overall.

Speaker Change: Each product line has a different.

Speaker Change: Kind of percentage, that's weighted toward spot versus contract in each region is a little bit different I would say on the acetate tow side of things things are a little lower percentage that is spot versus contract most of that business is contract in our other product lines.

Speaker Change: Cedric acid ban on motions for example, it's different by region and so I think just with the constraints that we had due to some of the.

Scott Richardson: And so I think just with the constraints that we had due to some of the supplier outages, you know, we just we didn't have the same flexibility that we typically do to be able to flex our value chain in the Western Hemisphere, which limited some of those opportunities.

Supplier outages.

Speaker Change: We just we didn't have the same flexibility that we typically do to be able to flex our value chain in the western hemisphere, which limited some of those opportunities.

David Begleiter: Okay, got it. And then medical, can you explain the other time, other timing impact in the quarter? And I think some of your peers are still talking about continued destocking in medical. I guess, how has, you know, applications outside of implants performed in the quarter?

Unknown Executive: Okay, good.

Okay got it and then medical can you explain the other time other timing impacting a quarter and I think some of your peers are still talking about continued destocking medical I guess, how has applications outside of implants performed in the quarter.

Lori Ryerkerk: And then medical, can you explain the other time in other timing impacting the quarter and that I think some of your peers are still talking about continued destocking medical. I guess how has, you know, applications outside of implants performing the quarter. It's been very stable. You know, our medical business has been a key growth area for us. It has been an area focused really around, you know, growing in the areas where we can be successful and picking some of the winning spaces. But we talked a lot about implants. We've also talked a lot about drug delivery, continuous glucose monitoring, and a lot of different mega trends there that have been, you know, useful for our farmers and working these opportunities for a long period of time.

Scott Richardson: It's been very stable. You know, our medical business has been a key growth area for us. It has been an area focused really around, you know, growing in the areas where we can be successful and picking some of the winning spaces. But we've talked a lot about implants. We've also talked a lot about drug delivery, continuous glucose monitoring, a lot of different megatrends there that have been, you know, useful for our polymers, and we've been working on these opportunities for a long time.

Speaker Change: It's been very stable you know our medical.

Speaker Change: Business.

Speaker Change: Has been a key growth area for us it has been.

Speaker Change: An area focus really around.

Speaker Change: Growing in the areas, where we can be successful in picking up some of the winning spaces.

We've talked a lot about implants, we've also talked a lot about drug delivery continuous glucose monitoring a lot of different mega trends there that had been.

Speaker Change: Useful for our commerce and we've been working these opportunities for a long period of time, our medical implant business in general certainly is getting better each year, but you are going to have some fluctuations from quarter to quarter. So I'd say, that's really not demand related is just kind of more normal normal order patterns in our business outside of implants has been extremely.

Scott Richardson: You know, our medical implant business in general is getting better each year, but you are going to have some fluctuations from quarter to quarter. So that's really not demand-related. It's just kind of normal, normal order patterns. And our business outside of implants has been extremely stable and growing. Okay. Thank you.

Lori Ryerkerk: You know, our medical implant business in general certainly is getting better each year. But you are going to have some fluctuations from quarter to quarter. So it's a, that's really not demand related. It's just kind of more normal normal order patterns, and our business outside of implants has been extremely stable and growing.

Speaker Change: Stable and growing.

Unknown Executive: Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Hassan Ahmed: Our next question comes from Hassan Ahmed with LMB Global. Please take a question. Morning, Barry.

Operator: Our next question comes from Hassan Ahmed with Alembic Global. Please state your question.

Speaker Change: Our next question comes from Hassan Ahmed with Alembic Global Please state your question.

Hassan Ahmed: Morning, Lori. Lori, a couple of quarters ago, you know, in your prepared remarks, you guys talked about sort of maximizing the make versus buy flexibility. (Inaudible)

Hassan Ahmed: Good morning Laurie.

Lori Ryerkerk: Sorry, a couple of quarters ago, you know, in your prepared remarks, you guys talked about sort of maximizing the neck versus biflexibility at selenies, you know, particularly now in light of, you know, the force mature on the acetate slash van side of things. Is there a sort of heightened level of urgency around that? I mean, how are you, how are you thinking about that and what form will that take on a go forward basis? I don't think what we've experienced is on would change our view. I mean, we always want to have the flexibility. You know, if you look at this past quarter, we were unable to make because of our supplier issues and some instances.

Hassan Ahmed: A couple of quarters ago, you know in your prepared remarks, you guys talked about sort of maximizing the make versus buy flexibility activities. You know you know, particularly now in light of you know the force majeure or on the <unk> Slash van side of things is there.

Speaker Change: It's sort of heightened you know level of urgency around that I mean, how are you. How are you thinking about that and what form will that take on a go forward basis.

Lori Ryerkerk: I don't think what we've experienced, Hassan, would change our view. I mean, we always want to have the flexibility. You know, if you look at the past quarter, we were unable to make because of our supplier issues in some instances. And so we actually went into the market to buy to the extent we could, but at a higher cost. I mean, that's not ideal.

Speaker Change: If you look at this past quarter, we were unable to make because of our supplier.

Speaker Change: Issues in some instances until we actually went into the market to buy to.

Scott Richardson: And so we actually went into the market to buy, to the extent we could, but at a higher cost. I mean, that's not ideal, but you know, our first priority is to keep our customers whole and to meet our contractual commitments with our customers. So, you know, in reliability situations or turn around or whatever, having that ability is good. And then, you know, the other side of that is like we've seen in nylon when the margins for raw polymer got so low, it is really helpful that we had taken the step to shut down and trope and put ourselves where we could be buying raw polymer on the market.

Lori Ryerkerk: But you know, our first priority is to keep our customers whole and to meet our contractual commitments with our customers. So, you know, in reliability situations or turnarounds or whatever, having that ability is good. And then, you know, the other side of that is, like we've seen in nylon, when the margins for raw polymer got so low, it is really helpful that we had taken the step to shut down Oontrope and put ourselves in a position where we could be buying raw polymer on the market at what was a very, you know, low price, certainly lower than we would have been able to make it ourselves.

Speaker Change: So you know in in reliability situations, our turnarounds or whatever having that ability is good and then you know the other side of that is like we've seen in nylon win.

Speaker Change: The margins for Ralph Hallmark out to low it is really helpful that we had taken the steps to shut down and drove and put ourselves where we could be buying raw polymer on the market and what was a very.

Scott Richardson: And what was a very, you know, low, low price situation, certainly lower than we would have been able to make it ourselves. So again, I don't think our view is changing at all in terms of wanting to always have that ability to make or by depending on the economic situation and also to help us through periods of operational, you know, shortage.

Speaker Change: Low price situation, certainly lower than we would've been able to make it ourselves. So again I don't think our view is changing at all in terms of wanting to always have that ability to make or buy depending on the economic situation and also to help us through periods of operational shortages.

Lori Ryerkerk: And I don't think our view is changing at all in terms of wanting to always have that ability to make or buy, depending on the economic situation, and also to help us through periods of operational, you know, shortage.

Unknown Executive: Anderson, Anderson, extremely helpful.

Hassan Ahmed: understood, and understood. Extremely helpful.

Speaker Change: Understood understood.

Speaker Change: Extremely helpful and you know just a just as a follow up you know I know you've made a couple of comments about the undifferentiated sort of nylon side of the market. You know can you can you sort of dig a little deeper for us.

Scott Richardson: And just as a follow-up, I know you've made a couple of comments about the undifferentiated nylon side of the market. Can you take a little deeper for us on what the goings-on are with regards to supply-demand fundamentals over there? You're obviously flat; the whole notion of Chinese capacity being below the cost curve. Right now. So, you know, how do you see, you know, this year and over the next couple of years, supply-demand dynamics planning out? You mean, look, nylon is no different than the rest of our portfolio and engineering materials. You kind of have three categories of business there.

Hassan Ahmed: And, you know, just as a follow-up, you know, I know you've made a couple of comments about the undifferentiated sort of nylon side of the market, but could you could sort of dig a little deeper for us on, you know, what the goings on are with regards to supply and demand fundamentals over there? I mean, you know, you obviously flagged the whole notion of Chinese capacity being below the cost curve right now. So, you know, how do you see supply and demand dynamics this year and over the next couple of years?

Speaker Change: You know what the goings on are with regards to supply demand fundamentals over there I mean, you know you obviously flagged the whole notion of.

Speaker Change: Chinese capacity being below the cost curve right now so you know how do you see this.

This year and over the next couple of years supply demand dynamics spanning out.

Scott Richardson: I mean, look, nylon is no different than the rest of our portfolio in engineering materials. You kind of have three categories of business there. You have a standard grade category.

Speaker Change: Yeah, I mean look nylon is no different than the rest of our portfolio in engineered materials, you kind of have three categories of business. There you have a standard grade category you had a kind of a prospect in category, where you have more competition you have there really specialty new.

Scott Richardson: You have a standard gray category. You have a kind of a spec in category where you have more competition. You have the really specialty, new applications area. And it's really important that we play in all three buckets there. Just because, you know, customers oftentimes are buying all three. And we want to make sure we're also filling out our assets. And so it is, while the competitiveness in the standard grade is definitely there, they're still really good opportunities. Kind of in that that's best in and specialty area. I mean, just a simple data point. The first half of the year, we actually closed over 400 projects in our nylon business using the pipeline model.

Scott Richardson: You have a kind of speculative category where you have more competition, and then you have the really specialty new applications area. And it's really important that we play in all three buckets there, just because customers oftentimes are buying all three, and we want to make sure we're also filling out our assets. And so it is, while the competitiveness in the standard grades is definitely there, there's still really good opportunities kind of in that spec'd in and specialty area.

Speaker Change: New applications area, and it's really important that we play in all three buckets. There just because customers often times are buying all three and we want to make sure. We're also filling out our assets and so it is while the competitiveness in the standard grades is definitely there they're still really good.

Speaker Change: <unk> kind of in that that specced in and specialty area. I mean, just a simple data point in the first half of the year, we actually closed over 400 projects in our nylon business using the pipeline model. That's a significant step up from the second half of last year and so it's a good proof point that what we're doing there and really the <unk>.

Scott Richardson: I mean, just a simple data point: in the first half of the year, we actually closed over 400 projects in our nylon business using the pipeline model. That's a significant step up from the second half of last year. And so it's a good proof point that what we're doing there, and really the commercial team's focus on working with customers and building really nice, differentiated business for the long term, is going to pay off.

Scott Richardson: That's a significant step up from the second half of last year. And so it's a good proof point that what we're doing there, and really the commercial team's focus on working with customers and building really nice differentiated business for the long term, is going to pay off. We're going to have to, you know, participate in the basic blocking and tackling part of the marketplace. But having that flexibility, Laurie just talked about is so critical enough, kind of building this more contemporary nylon model that can be overall successful and can continue to grow.

<unk> teams focus on working with customers and building really nice differentiated business for the long term is going to pay off we're going to have to participate in the basic blocking and tackling part of the marketplace.

Scott Richardson: We're going to have to participate in the basic blocking and tackling part of the market, but having that flexibility Lori just talked about is so critical for us to kind of build this more contemporary nylon model that can be overall successful and can continue to grow.

Speaker Change: But having that flexibility Lori just talked about is so critical in us kind of building. This more contemporary nylon model that can be overall successful and can continue to grow.

Hassan Ahmed: Very helpful. Thank you so much.

Unknown Executive: Thank you so much.

Speaker Change: Very helpful. Thank you so much.

Salvator Tiano: Our next question comes from Salvador Tiano with Bank of America.

Operator: Our next question comes from Salvator Tiano with Bank of America. Please state your question.

Speaker Change: Our next question comes from Salvator Tiano with Bank of America. Please state your question.

Salvator Tiano: Please stay your question. Yes, thank you very much. So firstly, I want to understand, I think you saw on the 25 million packet that you mentioned the timing as well as some inventory changes that will weigh on two, three mentioned materials. Does this mean that you were essentially producing a both sales in the first half and therefore, you know, what this 25 million is while this is a headwind to Q3. It was actually at all forward effectively H1 for the food here. Is that how we should think about it? Yes, our large chunk of that is some of the footprint actions that we've taken, and we've been building, you know, inventory now for a number of quarters.

Salvator Tiano: Yes, thank you very much. So, firstly, I want to understand, I think you, so on the $25 million package that you mentioned the timing as well as some inventory changes that will weigh on Q3 in engineering materials, does this mean that you were essentially producing above sales in the first half and therefore, you know, what this $25 million is, while this is a headwind to Q3, it was actually a pull forward effectively in H1 for the full year? Is that how we should think about it?

Salvator Tiano: Yes, thank you very much.

Salvator Tiano: So firstly I wanted to understand I think so on the $25 million bucket, but you mentioned that timing as well.

Speaker Change: Some inventory.

Speaker Change: Right.

Speaker Change: Changes.

Speaker Change: We will weigh on Q3, and then Shannon materials does this mean that you were essentially producing a boat sales in the first half and therefore.

Speaker Change: This 25 million is that while this is a headwind to Q3. It was actually move forward effectively H one for the full year is that how we should think about it.

Chuck Kyrish: Yes, a large chunk of that is some of the footprint actions that we've taken, and we've been building inventory now for a number of quarters, so I wouldn't look at it as kind of being a big benefit in Q2 in particular. It's kind of been a gradual uptick. We also just have some kind of normal; we have certain products that have campaign runs, and so you'll have a little bit of an uptick from time to time and then a downtick, so

Speaker Change: Yes, so a large chunk of that is is some of the footprint actions that we've taken and we've been building.

Speaker Change: Inventory now for a number of quarters. So I wouldn't look at it as kind of being a big benefit in Q2 and in particular, it's kind of been a gradual uptake. We also just have some kind of normal we have certain products that have campaign runs and so you'll have a little bit of an uptick from time to time and then a downturn so I wouldn't.

Scott Richardson: So I wouldn't look at it as kind of being a big, you know, benefit in Q2 in particular. It's kind of been a gradual uptake.

Scott Richardson: We also just have some kind of normal. We have certain products that have campaign runs. And so you'll have a little bit of an uptake from time to time, and then a downtake. So I wouldn't look at it as being materially different for that piece and what we typically think.

Speaker Change: Look at it as being materially different for that piece and what we've typically seen.

Scott Richardson: Okay, perfect. And the other thing I want to understand is if I heard correctly, I think there's a comment that next year's synergies will be similar to these year's levels, which I believe we're still targeting 150 million. Firstly, is that correct? And secondly, if I go back to the initial cost synergies targets from your M&M slides, I believe there's like more like a 50, 60, 70 million figure left. So how do you get to a number that's more than double that next year?

Salvator Tiano: Okay, perfect. And the other thing I want to understand is, if I heard correctly, I think there was a comment that next year's synergies will be similar to this year's levels, which I believe we're still targeting 150 million. Firstly, is that correct? And secondly, if I go back to the initial call synergies targets from your M&M slides, I believe there was more like a 50, 60, or 70 million figure left. So how do you get to a number that's more than doubled the next year? Yeah, so let me clarify.

Okay, perfect and then the other thing I wanted to under 70 sites. If I heard correctly I think there is a comment that next year senior chase will be similar to this year's levels, which I believe we're still targeting $160 million.

Speaker Change: Firstly is that correct and secondly, if I go back to the initial close synergy targets from your <unk> slides I believe there's like more like 50, 60 70 meter Fringer left so how do you get to a number that's more than double that next year.

Lori Ryerkerk: Yeah, so let me clarify myself because my comments probably weren't clear before. If you look at 23, we had 100 million synergies, then if you look at 24, 150 million. And so my comment was, look, I don't have an exact number yet for 25 because we've been very focused on 24, but I think our synergy should be based on the actions that we're taking here this year in the same range as the last two years, so somewhere in that range.

Scott Richardson: Yeah, so let me clarify, because probably my comments weren't clear before. If you look at 23, we had 100 million of synergy. Then, if you look at 24, 150 million. And so my comment was, look, I don't have an exact number yet for 25, because we've been very focused on 24. But I think our synergy should be based on the actions that we're taking here this year in the same range as the last two years, so somewhere in that range. And then the remainder of the step up in 23, 25 is really the improved performance of asset yields with no forced measure, a full year of CLK productivity, and then we should have some further interest rate reductions.

Speaker Change: Yeah. So let me clarify itself because it's probably my comments weren't clear before if you look at 'twenty three we had $100 million of synergy then if you look at 'twenty 450 million and so my comment was look I I don't have an exact number yet for 'twenty five because we've been very focused on 24, but I think our synergies should be.

Speaker Change: Based on the actions that we're taking here this year in the same range as the last two years, so somewhere in that range.

Lori Ryerkerk: And then the remainder of the step up in 2025 is really the improved performance of asset yields with no force majeure, a full year of CLK productivity, and then we should have some further interest rate reductions. So those are the things that I know about for 2025. But as I said, it's still too early to give any number with confidence yet on 2025. Great, thank you very much. The next question comes from Lawrence Alexander with Jeffrey.

Scott Richardson: So those are the things that I know about for 2025, but as I said, it's still too early to give any number with confidence on 2025.

Lori Ryerkerk: Our next question comes from Laurence Alexander with Jeffries. Please state your question. Good morning, I just want to confirm that the midpoint of your outlook for the back half of the year is predicated. It looks like it's predicated on your automotive volumes being up like mid single digits, you know, call it 23% above a flat, slightly positive. Auto build rate, is that right? We are expecting some uptick, some moderate volume increase, I would say, in volumes into automotive.

Operator: Our next question comes from Lawrence Alexander with Jeffreys. Please state your question. Good morning. I just want to confirm.

Speaker Change: Our next question comes from Laurence Alexander with Jefferies. Please state your question.

Laurence Alexander: Good morning, I just wanted to confirm.

Laurence Alexander: Yes that the midpoint of your outlook for the back half of the year is predicated as it looks like it's predicated on your automotive volumes being up mid single digits call. It <unk>.

Speaker Change: 3% above.

Speaker Change: Flat to slightly positive.

Speaker Change: Auto build rate is that right.

Lawrence Alexander: We are expecting some uptick, some moderate volume increase, I would say in volumes going into the automotive sector.

Speaker Change: We are expecting some uptick some moderate volume increase I would say in volumes into automotive.

Patrick Cunningham: Thank you.

Speaker Change: Thank you.

Operator: Our next question comes from Patrick Cunningham with Citi. Please state your question.

Patrick Cunningham: Our next question comes from Patrick Cunningham with city. Please state your question. Hi, good morning. Thanks for taking my question, and you talked a little bit about the weaker non-contracted sales for toe. You know, how meaningful is this in terms of typical toe sales? How is the contract side of the business performing and what are your medium term supply and demand expectations for the toe business? I mean, toe business has been very stable, Patrick, and you know, the contracted teeth of the business has, you know, performed as expected. Again, as I mentioned earlier, the non-contracted part is a small percentage.

Speaker Change: Our next question comes from Patrick Cunningham with Citi. Please state your question.

Patrick Cunningham: Hi, good morning. Thanks for taking my question. You talked a little bit about the weaker non-contracted sales for tow. How meaningful is this in terms of typical tow sales? How is the contract side of the business performing? And what are your medium-term supply and demand expectations for the tow business?

Patrick Cunningham: Hi, Good morning, Thanks for taking my question, you talked a little bit about the weaker.

Patrick Cunningham: Non contracted sales for tow how meaningful is this in terms of typical tow sales.

How is the contract side of the business performing and what are your medium term supply and demand expectations for the tow business.

Scott Richardson: So business has been very stable, Patrick, and you know, the contracted piece of the business has, you know, performed as expected. Again, as I mentioned earlier, the non-contracted part is a small percentage. It's just, we did see a little bit of inventory reduction from our customers in that part of the sector during the second quarter. So it's, we don't expect it necessarily to continue.

Patrick Cunningham: So business has been very stable Patrick in the.

Patrick Cunningham: The contracted piece of the business has performed as expected.

Speaker Change: Again as I mentioned earlier, the non contracted part is a small percentage. It's just we did see a little bit of <unk>.

Patrick Cunningham: It's just we did see a little bit of inventory reduction from our customers in that part of the sector during the second quarter. So it's, we don't expect it necessarily to continue going forward. Got it, that's normal.

Speaker Change: Inventory reduction from our customers in that part of the <unk>.

Speaker Change: Sector.

Speaker Change: During the second quarter so it.

Speaker Change: We don't expect it necessarily to continue going forward.

Patrick Cunningham: Got it. That's helpful. And then maybe just within nylon, you touched on this a little bit, but can you just talk about the contemporary business model here? How you feel it's performed? You know, how you're maybe thinking about the footprint if we see further pressure from here? And on the flip side, would you put incremental costs back into this business if demand improves or the make versus buy economics change?

Speaker Change: Got it that's helpful. And then maybe just within nylon you touched on this a little bit but can you just talk about the contemporary business model here. How you feel it's performs how you're maybe thinking about the footprint. If we see further pressure from here and on the flip side would you put incremental costs back into this business if demand improves or the <unk>.

Scott Richardson: And then maybe just within nylon, you touched on this a little bit, but can you just talk about the contemporary business model here, how you feel it's performed, you know, how you're maybe thinking about the footprint, if we see further pressure from here. And on the flip side, would you put incremental costs back into this business if, you know, demand improves or the make respite economics change? Look, we're really proud of the team.

Speaker Change: The economics change.

Scott Richardson: Look, we're really proud of the team. I mean, the team has come together and embraced a different way of operating here.

Scott Richardson: Look, we're just really proud of the team.

Speaker Change: We're really proud of the team I mean, the team has come together and embraced a different way of operating here and we're taking.

Scott Richardson: And we're taking the ideas really across each function of the organization to really go and build out a model that we can be proud of that can deliver greater than 25% EBITDA in any economic environment. And that's our target. We're early on it.

Scott Richardson: I mean, the team has come together and embraced a different way of operating here, and we're taking of the ideas really across each functionality organization to really go and build out, you know, a model that we can be proud of that can deliver greater than 25% EBITDA in any economic environment. And that's our target. We're early in it. I mean, we've had some good success. You know, we're seeing margin expansions. We talked about we're seeing nice winds coming from our project pipeline, but we have to continue to work the cost side of the equation. We have to continue to focus on, you know, really bringing our organization together to embrace the pipeline model and continue to elevate the returns that we're getting, you know, overall from the business.

Speaker Change: The idea is really across each function in the organization to really go and build out.

Speaker Change: Our model that we can be proud of that can deliver greater than 25% EBITDA in any economic environment and thats. Our target. We're early innings I mean, we've had some good success, we're seeing margin expansion as we've talked about we're seeing nice wins coming from our project pipeline, but we have to continue to work the cost side of the equation we have to continue.

Scott Richardson: I mean, we've had some good success, you know; we're seeing margin expansion, as we talked about, we're seeing nice wins coming from our project pipeline. But we have to continue to work the cost side of the equation, we have to continue to focus on, you know, really bringing our organization together to embrace the pipeline model and continue to elevate the returns that we're getting, you know, overall from the business.

Speaker Change: To focus on.

Speaker Change: Really bringing our organizations together to embrace.

Speaker Change: The pipeline model and continue to elevate the returns that we're getting overall from the business. So.

Scott Richardson: So, you know, depending on what the market gives us, we're going to have to pivot, much like we do in other parts of our business, both an asset yield and EM, and it's building those muscles to be able to adapt as things change from quarter.

Depending on what the market gives us we're going to have to pin it much like we do.

Speaker Change: Other parts of our business with an asset yield NEM and its building those muscles to be able to adapt as things change from quarter to quarter.

Speaker Change: Very helpful. Thank you.

Speaker Change: Okay.

Operator: Thank you.

John Roberts: Our next question comes from John Roberts with Mizzouho Securities. Please stay your questions. Thank you. Just going back to Nylon and China here. They have a lot of producers who serve both the plastics and fiber markets, and given the weak carpet and textile markets. Are you seeing some of that China nylon shift from fiber to plastics? I know some applications can't switch, but I thought there was enough that could switch that maybe that would be pressuring the market. John, that's really not where we're seeing the pressure from. There's a lot of consistent players in the plastics market.

Scott Richardson: So, you know, depending on what the market gives us, we're going to have to pit it much like we do in other parts of our business, both in asset fields and EM, and it's building those muscles to be able to adapt as things change from quarter to quarter. Very helpful, thank you. Our next question comes from John Roberts with Mizuho Securities. Please state your question.

Our next question comes from John Roberts with Mizuho Securities. Please state your question.

Hi, Thank you just going back to nylon in China. They have a lot of producers who serve both the plastics and fiber markets and given the weak carpet and textile markets are you seeing some of that China nylon shift from fiber to plastics I know I know some applications can't switch, but I thought there was enough that could switch that maybe that would.

Speaker Change: Pressuring the market.

John Roberts: John, that's really not where we're seeing the pressure. I mean, there are a lot of consistent players in the plastics market. So I wouldn't say that's been a material issue.

Speaker Change: John Thats really not where we're seeing the pressure from it and Theres a lot of consistent players in the plastics market. So I wouldn't say that's been a mess.

John Roberts: So I wouldn't say that's been a material issue. Thank you.

Speaker Change: Material issue.

Speaker Change: Got it thank you.

Unknown Executive: Yego, we'll make the next question or last one, please.

Operator: Diego, we'll make the next question our last one, please.

Speaker Change: Yeah. So we'll make the next question our last one please.

Operator: Thank you. And our final question for today comes from John McNulty with BMO Capital Markets. Please state your question.

Unknown Executive: Thank you.

Speaker Change: Thank you.

John Mcnulty: And our final question for today comes from John McNulty with the M.O. Capital markets. Please stay your questions.

Speaker Change: Final question for today comes from John Mcnulty with BMO capital markets. Please state your question.

John Mcnulty: Yeah, good morning. Thanks for taking my question. So Lori, I think you said of the original $150 million that you expected to get from lower raw materials kind of working through, you're going to get about half that. Does the other half get pushed out into 2025? Or is it really just an opportunity that, given the circumstances, you're just not going to be able to capture? I guess, how should we be thinking about that?

John Mcnulty: Yeah, good morning. Thanks for taking my question. So, Laurie, I think you said of the original 150 million that you expected to get from lower raw materials, kind of working through. You're going to get about half that. Does the other half get pushed out into 2025? Or is it really just an opportunity that, just given the circumstances, you're just not going to be able to capture? I guess, how should we be thinking about that? I would think about it as we weren't able to capture it this year. There's no guarantee it will be there next year.

John Mcnulty: Yes. Good morning, Thanks for taking my questions. So Laurie I think you said of the original $150 million that you expected to get from lower raw materials kind of working through you're going to get about half that does the does the other half get pushed out into 2025 or is it is it really just an opportunity that just given the circumstance.

Speaker Change: You're just not going to be able to capture I guess, how should we be thinking about that.

Lori Ryerkerk: I would think about it as, we weren't able to capture it this year; there's no guarantee it will be there next year. If you think about it, the cost of inventory we're building right now will be what we see in the first half of next year, at least in the engineering materials. So I can't count on that for next year; I mean, we just have to see how the cost of inventory goes for the rest of the year.

I would think about it as we werent able to capture at this year. There's no guarantee we'll be there next year. If you think about it the cost of inventory. We're building right now it will be what we see in the first half of next year at least in the engineered materials. So I can't count on that for next year. I mean, we just have to see how cost of inventory goes further.

Scott Richardson: If you think about it, the cost of inventory we're building right now will be what we see in the first half of next year, at least in the engineering materials. So, I can't count on that for next year. I mean, we just have to see how cost of inventory goes for the rest of this year.

Speaker Change: Rest of this year.

John Mcnulty: Okay, fair enough.

John Mcnulty: Okay, fair enough. And then, with regard to the acetic acid capacity that came on line in China, you know, the two new world-scale plants, I, I think one of the issues was that you didn't see a whole lot of the downstream assets come on line yet. And I think that was putting pressure on acetic acid prices. Can you give us an update as to whether or not those downstream assets have come on line yet?

Speaker Change #100: Okay Fair enough and then I guess with regard to the to the acetic acid capacity that came on in China. The two new world scale plants.

John Mcnulty: And then I guess with regard to the acetic acid capacity that came on in China, you know, the two new world scale plans, I think like one of the issues was that you didn't see a whole lot of the downstream assets come on yet. And I think that was putting pressure on acetic acid prices.

Speaker Change #101: I think like one of the issues was that you didn't see a whole lot of the downstream assets come on yet and I think that was putting pressure on acetic acid prices can you give us an update as to whether or not those downstream assets come on yet and if they if they havent does that mute the ability.

John Mcnulty: Can you give us an update on whether or not those downstream assets have come on yet? And if they haven't, does that mute the ability for growth or improvement in the market even as China construction starts to come back on and some of the downstream demand starts to come back on? I guess, how should we be thinking about that?

John Mcnulty: And if they, if they haven't, does that mute the ability for growth or improvement in the market? Even as, you know, Chinese construction starts to come back on and some of the downstream demand starts to come back on, I guess, how should we be thinking about that?

Speaker Change #102: For for growth or improvement in the market, even as China construction starts to come back on and some of the downstream demand starts to come back on I guess, how should we be thinking about that.

Lori Ryerkerk: So John, some of the uses that those plants were expected to serve were things like capilactin, which is new, PVOH, and EVA. I'm not sure about the capilactin plant, if I'm honest, but PVOH I think is up and OK. EVA is up from what we know, but honestly, EVA demand right now, or not EVA demand, but utilization of the EVA plants has gone to 70% or below from what we know. So again, just because of the softness right now in solar panels. And so I think while it may be up, we're not seeing those plants consuming the volume of BAM that we would normally expect.

John Mcnulty: So, John, some of the uses that those plans were expected to serve were things like capital act and which is new, PVOH, EVA. I'm not sure about the capital act and plan if I'm honest, but PVOH I think is up and okay. EVA is up from what we know, but honestly, EVA demand right now, or not EVA demand, but utilization of the EVA plan has gone to 70% or below from what we know. So, you know, again, just because of the softness right now in solar panels. And so, I think, you know, while it may be up, we're not seeing those plans consuming the volume of VAM that we would normally expect.

Speaker Change #103: So John somebody uses that those plants were expected to serve where things like capital actin, which is new PV O H E. B, a I'm not sure about the capital at some point, if I'm honest, but PV Oh age I think is upping. Okay. EMEA is up from what we know, but but honestly E. B a demand right now.

Speaker Change #103: Not even any demand, but by utilization of the EPA plants has gone to 70% or below from from what we know so as you know.

Speaker Change #103: Again, just because of the softness right now in solar panels.

Speaker Change #103: And so I think while it may be up we're not seeing those plants consuming the volume of band that we would normally expect.

Scott Richardson: Yeah, John, really the root cause of that is the end-use demand, particularly paints, coatings, construction, and some of the solar spaces Lori mentioned, is just, is weak. And so, yes, while we've seen capacity come on and acetic acid and pricing kind of move up and down, our margins have been largely stable now for quite a while. We've seen compression in van margins because the construction sector, as well as solar, has been so weak. So I think that's more of kind of where that compression is.

Scott Richardson: Yeah, John, the really the root cause of that is the end-use demand, particularly paints, coatings, construction, and some of the solar spaces where we mentioned are just our week. And so, yes, while we see capacity come on and see the acid and pricing kind of move up and down, our margins have been largely stable now for quite a while. We've seen compression in VAM margins because that construction sector, as well as solar, has been so weak. So, I think that's more of kind of where that compression.

John Mcnulty: John there really the root cause of that is the end use demand, particularly paints coatings and construction and some of the solar space. As Lorie mentioned are just are weak and and so yes, while we've seen capacity come on in acetic acid and pricing kind of move up and down our margins have been largely stable now for quite a while we've seen.

Lorie: Compression in margins because of those that construction sector.

Speaker Change #105: As well as solar has been so weak. So I think that's more of kind of where that compression has been seen.

Unknown Executive: and Edson C. Thank you very much for the call.

John Mcnulty: Got it. Thanks very much for the call.

Speaker Change #106: Got it thanks very much for the color.

William Cunningham: Thank you, and I'll now hand this floor back to Bill Cunningham for a close remarks. Thank you. We'd like to thank everyone for listening in today. As always, we're available after the call for any follow-up questions.

Bill Cunningham: Thank you, and I'll now hand the floor back to Bill Cunningham for a closing remark.

Speaker Change #106: Thank you and I'll now hand, the floor back to Bill Cunningham for closing remarks.

Bill Cunningham: Thank you.

Bill Cunningham: We'd like to thank everyone for listening in today. As always, we're available after the call for any follow-up questions. Diego, please go ahead and close out the call.

Bill Cunningham: I'd like to thank everyone for listening in today.

As always we are available after the call for any follow up questions Diego.

Unknown Executive: Diego, please go ahead and close up the call. This concludes today's conference. All parties may now disconnect. Thank you.

Bill Cunningham: Diego. Please go ahead and close out the call.

Operator: This concludes today's conference. All parties may now disconnect. Have a good day.

Diego: This concludes today's conference all parties May now disconnect have a good day.