Q4 2024 Celanese Corp Earnings Call
For more information visit www.FEMA.gov
Thanks for watching!
Unknown Executive, William Cunningham
Unknown Executive, William Cunningham
Speaker Change: Greetings and welcome to the Selanese Q4 2024 earnings call and webcast.
Speaker Change: At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Bill Cunningham, Vice President of Investor Relations. Thank you. You may begin.
Speaker Change: Thanks Daryl. Welcome to the 70s Corporation fourth quarter 2024 earnings conference call. My name is Bill Cunningham, Vice President of Investor Relations. With me today on the call are Scott Richardson, President and Chief Executive Officer, and Chuck Kyrish, Chief Financial Officer.
Speaker Change: Seleny's distributed its fourth quarter earnings release via BusinessWire and posted prepared comments and a summary presentation of key 2025 actions on our investor relations website yesterday afternoon.
As a reminder, we'll discuss non-GAAP financial measures today.
Speaker Change: You can find definitions of these measures as well as reconciliations to the comparable gap measures on our website.
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 and the prepared comments.
Speaker Change: Form 8K reports containing all of these materials have also been submitted to the SEC.
Speaker Change: Before we open it up for questions, I'd like to turn the call over to Scott Richardson for some opening remarks.
Thanks, Bill. Good morning, everyone.
Scott Richardson: These core competencies have driven shareholder value over our 20 years as a public company.
Scott Richardson: We are keenly focused on invigorating and capitalizing on these foundational capabilities in how we lead and drive business every day to improve performance and drive value creation.
Speaker Change: My first two months as CEO have been about prioritizing and driving action. Decisive steps we have taken to date include the following.
Speaker Change: We have executed on over $75 million worth of cost action that we outlined in our Q3 earnings call.
Speaker Change: We have reduced our 2025 capital plan to $300 to $350 million, which is about a $100 million reduction versus our spend last year.
Speaker Change: We have added a new leader to the engineered materials business in Todd Elliott to bring a fresh perspective and new energy to reducing complexity and driving improved results.
Speaker Change: We have added Chris Kuhn and Scott Sutton to our board of directors to bring additional finance and operational expertise to our boardroom, given the prioritization of cash generation, margin expansion, productivity, and deleveraging.
Speaker Change: And we have added a finance and business review committee to the board of directors, which Scott Sutton and I will jointly chair. This committee will help evaluate all options to improve the company's operating model performance, drive cash generation, and review our portfolio.
Speaker Change: We are moving forward with intensity and aggressiveness and are not hesitating to make bold changes to generate cash and deleverage the balance sheet.
Speaker Change: We know the journey in front of us is not an easy one, but we are energized by the opportunity ahead. We will share wins no matter the size as we progress in the coming months. And I look forward to reporting on our progress as we advance our plans to improve performance and drive value creation.
Speaker Change: Thank you. And now, Daryl, let's open the line for questions.
Speaker Change: Thank you. We will now be conducting 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 your line is in the question queue. You may press star 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for the first question.
Speaker Change: Our first questions come from the line of David Begleiter with Deutsche Bank. Please proceed with your question. David Begleiter, Deutsche Bank. Thank you. Good morning. Scott, you mentioned some divestitures in the prepared comments. Could you get some sense of potentially the size of these divestitures and when they might occur?
Speaker Change: And one more thing, I know equity raise is not your first choice, but given what the balance sheet is today, what are your thoughts on potentially raising equity at some point to help de-lever the balance sheet?
Our capital structure is to fund our acquisitions with debt.
Speaker Change: In addition, we're unlocking cash from actions we've taken on the dividend, reduction of CapEx, reducing working capital, and we're aggressively working divestitures, as I just talked about. Look, equity is extremely dilutive, and we don't believe that's a step that's necessary, given the strength of the debt market.
Yeah, David, hey, I can add to that. Look...
Speaker Change: As Scott mentioned, we're taking numerous actions to reduce leverage, but what you're also going to see us continue to do in the meantime
Speaker Change: is be proactive in reducing the risk in our debt maturities. We have a plan and we've prepared to access the debt markets quickly and opportunistically, and the credit markets are very strong right now.
Speaker Change: You know the principles around that are going to be to extend a portion of our more near-term maturities You know aligning what remains with our cash generation, and we'll make sure and do that at a prudent and reasonable cost
Thank you very much.
Speaker Change: Thank you. Our next questions come from the line of Frank Mitch with Birmingham Research. Please proceed with your questions.
Speaker Change: Hey, good morning. I want to dive into your outlook for the first half of the year.
Speaker Change: As you talked about the second quarter, you indicated that it wouldn't have 100 million of non-repeating items that are impacting the first quarter.
Speaker Change: And yet, if I look at the dollar increase expected versus the first quarter, that only implies like $20 million or so.
Speaker Change: of improvement from volumes and SGNA, et cetera, which frankly, looking at 2Q versus 1Q, that really doesn't seem like that much. Can you help explain some of the thinking there?
Speaker Change: Yeah, thanks, Frank. Look, we're getting some of that here at the end of the of the first quarter in that number, not a lot, but a little bit. And so that's that incremental in the second quarter is about that right range you talked about. There's, you know, most will be on the run rate in the second quarter, certainly to get to the full kind of 80 million that we called out. And we're continuing to work additional action. So look, it's really important that we look at what we see right in front of us.
Unknown Executive, William Cunningham
Speaker Change: Gotcha, thank you. And then the other thing in the prepared remarks was a comment that free cash flow for 2025.
Speaker Change: And I'm curious if you can kind of go through, you know, kind of order of magnitude that the streets should be thinking about and how do you get there? Well, Frank, you know, we haven't given the guide, you know, for any at this point in time for the year, but what I wanted to lay out are components.
Speaker Change: in pre cash flow below the EBITDA line that that we do expect to improve significantly year over year, right? So
Speaker Change: Working capital was a use of cash last year, expected to be a source of cash. Cash tax would be significantly lower. We've lowered CapEx, roughly $100 million.
Speaker Change: Those, you know, before giving a guide for earnings as we're kind of working through several things, I just wanted to lay out areas in Pre-CASA that will improve year-over-year below EBITDA.
Thank you. Thank you.
Speaker Change: Thank you. Our next questions come from the line of Jeff Zekakis with JPMorgan. Please proceed with your questions.
Thanks very much.
Scott Sutton has been brought in to the
Speaker Change: Board of Seleney's. I was wondering, Scott, if you played a role in bringing him in or what role you played in Scott coming to the board?
Speaker Change: Scott and I have known each other for a long time and I'm thrilled that Scott has agreed to join the board. I didn't see that coming.
Speaker Change: We have been on a path as a board that's been very deliberate in how we refresh.
Speaker Change: The Board with Capabilities, they're going to help us navigate the landscape.
Speaker Change: that we're in. And Scott's the latest add in that. And, you know, he brings unique capabilities, and has a track record of accelerating cash generation, deleveraging, value creation, and I'm really excited that he's going to help us in this journey.
Okay.
The second question is, in your prepared remarks,
Speaker Change: What you said was that over time, you reduced costs associated with the M&M acquisition by about $250 million.
Speaker Change: And then later in the script, what you say is that there's been competitive dynamics in your largest product lines like nylon, which offset your over year improvements made to the cost position, you know, as well as lower raw materials and
Manufacturing Footprint Cost Reduction.
Speaker Change: When you look at the M&M business from the time that you acquired it, like where do we stand now? Is the EBITDA really no different? Because price degradation has offset all of the
Speaker Change: Cost improvement or or you know, can you give us like where did we start and where are we now with the MNF acquisition?
For more information visit www.FEMA.gov
Speaker Change: Yeah, we're we have increased the EBITDA from M&M when you look at the synergies versus where it was when we closed the transaction, Jeff. And, you know, we have seen margin degradation in some product lines within the M&M portfolio. We've also seen some margin degradation in some of the product lines in the historical selling portfolio. We've also seen several product lines that have expanded margins. You know, this is a critical area of focus for us this year. You know, reversing this margin.
Unknown Executive, William Cunningham
Thanks so much.
Speaker Change: Thank you. Our next questions come from the line of Michael Sasan with Wells Fargo. Please proceed with your questions.
Hey guys, good morning.
Michael Sasan: Maybe a follow up on Eminem. Could you maybe just give us your thoughts on
Speaker Change: Yeah, is this a good business for Sony's longer term? I mean, what do you think the potential is here and and how do you sort of get it there?
Michael Sasan: and, you know, I suspect there's some macro help that you'll need there, but just, you know, what is the potential for Eminem now going forward?
Michael Sasan: Yeah, thanks, Mike. I mean, we've seen some challenges, but we've also seen some strength in several of the businesses. I mean, our high temp nylon portfolio that we acquired with the business has been a nice source of growth for us in electric vehicle applications, you know, with, you know, things like superior thermal shock characteristics in certain application areas.
Speaker Change: 준 side, I am Lucky from the August 2018 Inner Mabi root
Speaker Change: We've got to keep kind of keeping this machine moving from a pipeline standpoint, and we've also got to make sure that we, you know, aggressively work the cost side of the equation, just given where, you know, the fundamental macro is at.
Speaker Change: Got it. And then, you know, most folks haven't given an outlook for the full year 25. I understand that, but
Speaker Change: You know, should EBITDA be better in the second half versus the first half? And maybe if you don't have specifics, you know, what should be better or could be better than the second half?
Speaker Change: In terms of the walk for a better EBITDA and then Can you just give us your general thoughts and what the economic backdrop we should think about in 25 for Selenies?
Our focus is on moving with urgency, Mike.
to take decisive actions.
to be able to drive wins.
Speaker Change: is getting back to this point I just talked about on reversing margin compression in both the standard parts of the engineering materials portfolio, but also in the asset deals business.
Thank you. Thank you.
Speaker Change: Thank you. Our next questions come from the line of Ghanshyam Punjabi with Baird. Please proceed with your questions.
For more information visit www.FEMA.gov
Ghanshyam Punjabi: Thank you. Good morning, guys. Scott, first off, congrats on your new role and best wishes with everything.
Speaker Change: I guess, you know, going back to the EM segment and the new leadership there, you know, just curious as to how we should expect.
Speaker Change: strategy to sort of evolve versus what you have been doing. And then relatedly, can you, can you just comment on your view in terms of channel inventory levels downstream to that segment, you know, the customer level, et cetera.
Unknown Executive, William Cunningham
Speaker Change: Got it. And then, you know, you know, obviously, Scott, we've been in a two year global manufacturing slump. You know, you've been pulling levers on the cost side and working capital as best you can. But what are some of the other contingencies you have at your disposal in this scenario that, you know, the current paradigm continues for another year or longer in context of your debt load? Thanks.
Speaker Change: I believe there's always more that can be done, Donchum. And, you know, I think we've shown that with cost, given where, you know, the demand landscape is at, we are looking at, you know, really all elements of the business. And I just kind of highlighted on the engineering material side of things with those, these action steps that we're taking to reduce complexity. We have some of the similar things on the on the asseteel side of the house as well. And so it's really about kind of taking a no stone unturned approach to everything
For more information visit www.FEMA.gov
Thank you.
Speaker Change: Thank you. Our next questions come from the line of Josh Spector with UBS. Please proceed with your questions.
Speaker Change: Hey guys, this is James Cannon. I'm for Josh. Thanks for taking my question.
Speaker Change: I just wanted to ask on the earnings power of the acetyl business. I think previously you said 2024 was a typical run rate for the near term. I think.
Speaker Change: If I think about the contract resets, that would be an incremental call in 40, 50 million dollar headwind this year. Is that the right ballpark or is there something to offset that gets us back to the 1.1?
Speaker Change: I'll echo what I just said, James. There's always opportunity for us to drive margins. And we had some contract resets. The team is working really hard to offset those. That's been hard in Asia, where the supply-demand landscape is at. But we're looking for ways at which to leverage our optionality model there and flex up and down the value chain to be able to offset that and get back to those levels that we were at in the first
Unknown Executive, William Cunningham
Speaker Change: Thank you. Our next questions come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.
Speaker Change: Thank you. Has anything changed, Scott, about the scope of assets that you might consider digesting? And I just ask that because you mentioned in the prior answer that the...
Speaker Change: size would probably be similar to the divestiture that was done.
Speaker Change: the food ingredients. And my recollection was that in the past.
Speaker Change: More recently, we've been talking about maybe multiple smaller divestitures rather than the opportunity to sell a few things or one thing at a larger cost. Are you looking wider or deeper or anything changed in terms of what you're willing to divest?
Speaker Change: Yeah, we're looking at everything that's not critical to kind of our core operating models, Vincent. And that's really this engineered thermoplastic elastomers portfolio in the engineered materials business and our optionality model that starts with methanol and acetic acid and goes all the way through re-dispersible powders. And if it's not in those operating models, we're taking a look at it.
Speaker Change: But it needs to facilitate the leveraging and so you know that size I talked about was kind of in that range But I also said plus minus so there is a series of smaller ones that you know We get you that when added up or in that range, and then there's there's some opportunities that are a little larger
Speaker Change: The dissolution of the JV with Tayshaun on the Mylar. Is there anything else about your asset footprint that you're looking at? Maybe areas where you're not as advantaged or places where it might make sense to take capacity out of the market?
Speaker Change: We believe in having an efficient footprint, Vincent, and ensuring that we fully leverage the strong technical capabilities that we have in-house here at Celanese. And I think, you know, we have a long-term history of reducing our footprint, but yet adding capacity at our advantaged sites.
Speaker Change: that principle, that core principle of manufacturing is what we're leveraging to these M&M assets as well. By doing that, you get much greater leverage on fixed costs. And so we're consistently looking at opportunities to do that. We've taken action, we've
Speaker Change: Reduced our footprint by eight sites since we did the acquisition and we're continuing to look for opportunities to be as efficient as possible.
Unknown Executive, William Cunningham
Speaker Change: Thank you. Our next questions come from the line of Arun Vistwanathan with RBC Capital Markets. Please proceed with your question.
Unknown Executive, William Cunningham
Thanks for taking my question. Hope you guys are well.
and congrats on the new roles there.
such as Europe.
Speaker Change: Do you think because we've seen this inventory overhang now for two or three quarters And then I think you guys have taken that decisive action in q3 and q4 as well But it doesn't seem like that's been enough to really clear out the inventory so
Speaker Change: Do you think the actions in Q1 will result in that inventory reduction or will they linger beyond into Q2 and Q3?
Unknown Executive, William Cunningham
Unknown Executive, William Cunningham
Speaker Change: The value chain has too much inventory. We talked about that on our last earnings call, and we're working to match our inventory levels with where the fundamental demand is at. Demand has held pretty stable here in the first quarter, but the value chain is rebalancing the inventory footprint, and that's our channel partners, it's the tiers, the molders, and the end customers. And so the line of sight that we have today based upon our outlook is that we would see that.
come to a close here in the first quarter.
Speaker Change: The Q1 guidance, again, is in the $400 million or so EBITDA range.
Speaker Change: maybe slightly below that. Do you expect that to kind of lift up through the year, maybe into the $1.5 to $2 billion range on an annualized basis?
Speaker Change: and again, that would be, you know, more of second half weighted. Is it mostly those cost and productivity actions that would get you there or does it require some recovery and volume growth as well? Thanks.
Unknown Executive, William Cunningham
Speaker Change: But our focus is on the decisive actions that we're taking right now.
Speaker Change: to drive opportunities. And one of the things we called out is, you know, a focus on smaller projects in engineering material. One of the great things about smaller projects is they tend to be able to be commercialized in six to 12 months. And so it is, it's very important that we continue to work that with a level of aggressiveness
Speaker Change: to be able to improve that outlook in the second half.
Thanks.
Speaker Change: Thank you. Our next questions come from the line of Patrick Cunningham with Citi. Please proceed with your question.
Speaker Change: We don't see a big change coming in the supply-demand landscape, Patrick. And, you know, where things are today is the SPL industry is operating below the cost curve. And that's not sustainable. It's not been historically sustainable. And we haven't seen things degrade further, even though we've seen new capacity come into the marketplace from a margin perspective. And so we continue to look at where are those pockets of opportunity up and down.
Unknown Executive, William Cunningham
Unknown Executive, William Cunningham
For more information visit www.FEMA.gov
Got it. Understood.
Speaker Change: How should we think about incremental benefits from Clear Lake into 2025? I mean, are volumes any sort of offset to
Speaker Change: Contract resets here. Is there any reason why run rate utilization should get, you know, worse than where you exit the year, whether it's raw material availability or depressed demand levels, just trying to understand that the US operating footprint here.
up.
Speaker Change: Look, we're seeing the full run rate of the expansion as we exit 2024 and we've seen some obviously some slight offset from some of those contract resets, which is why we're working other opportunities to offset that. You know, we've got some natural gas headwind in the US to start the year that has seen higher costs, but we do expect that that will wane and come off as the weather improves and we move into the second quarter.
Great, thank you.
Speaker Change: Thank you. Our next questions come from the line of Alexei Yefremov with KeyBank Capital Markets. Please proceed with your questions.
Alexei Yefremov: Thanks, good morning everyone. It sounds like you're deliberately reducing inventory in AM in Q1. Is it possible to size it in terms of EBITDA so that we can understand how much could potentially come back in the second quarter from this deliberate action?
Unknown Executive, William Cunningham
Unknown Executive, William Cunningham
Michael Sasan: It's really not that substantial, Alexi. I wouldn't say it's kind of material like we saw in the fourth quarter.
Speaker Change: Okay, and a follow-up on EM as well. It looks like pricing came down maybe low single digit for the segment in Q4. What do you expect from price in Q1 and potentially Q2, another step down or stabilization?
Unknown Executive, William Cunningham
What we are seeing right now is.
Speaker Change: for the most part, you know, we're having to be competitive in certain standard grade applications, but the team is also working tenaciously on offsets. I mean, this has been a headwind. But again, in these standard grade applications,
Speaker Change: where margins are at for the industry are really at unsustainable levels. And so, we are working on opportunities to be able to turn that. The best way to do that is improving mix, and that's the criticality of working the pipeline and continuing to be successful in some of these more unique, higher growth, higher margin segments.
Transcription by CastingWords
Thanks guys.
Speaker Change: Thank you. Our next question has come from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.
Yes, thank you and good morning.
Kevin Mccarthy: Scott, are you essentially running Salonies today to maximize cash flow as opposed to maximizing earnings? Or is that not the case and you're really trying to strike a balance between the two?
For more information visit www.FEMA.gov
Kevin Mccarthy: Cash is a priority, Kevin. You know, given where our debt is at, we are looking to do everything that we can to unlock cash. And I think some of the actions that we have taken, whether it be the dividend, the reduction of capital, the reduction in working capital and a tenacious focus there, as well as aggressively working on the defestiture side, it is a focus on cash first.
Kevin Mccarthy: Okay, and then if I may, I want to follow up on on Acetyls. I think you idled some capacity temporarily in Singapore and Frankfurt as you discussed in the prepared remarks last night.
Speaker Change: Do you do that because they go temporarily cash negative or perhaps for a different reason?
Speaker Change: The aphid seal team wakes up every day, Kevin, and looks at the landscape that it's in and it
Speaker Change: It pivots, and it pivots up and down the chain, it pivots geographically where it sells, and then we match operating rates to the needs to maximize, you know, margin and EBITDA across the landscape and to meet our customers' needs. And that's, that is a model that that team will continue to operate on and will continue to focus on, you know, striking that right balance between volume and margin.
Thank you.
Speaker Change: Thank you. Our next questions come from the line of Hasan Ahmed with Alembic Global. Please proceed with your question.
Hasan Ahmed: Morning, Scott. First of all, congratulations on the new role and also congratulations on bringing Scott Sutton on board. Big fan.
Hasan Ahmed: First question on the guidance, you know, you guys talked about 25 cents to 50 cents in Q1 EPS and $1.25 to $1.50 as demand recovers in Q2.
Hasan Ahmed: We're doing everything that we can to drive our run rate much higher than that, Hassan, and it's the actions that we talked about. And, you know, our, our focus on not giving a guide in the second half is because we have multiple actions that are underway. I mean, I talked about the complexity reduction in engineering materials, you know, driving our asset seal optionality model to a level that was that performed better than we saw at the end of last year.
Hasan Ahmed: And then this margin compression component, in addition to everything else that we're doing broadly across
Hasan Ahmed: the cost side and SG&A and the manufacturing footprint. So we believe that there are decisive opportunities and actions that we can take here at Celanese to lift the run rate performance, even if we don't see a change in the macro.
Speaker Change: Understood. And in the presentation, you know, one of the things that you guys talked about was, well, I guess you gave six reasons to own Selanese shares today.
Speaker Change: and one of them was the strong earnings leverage, you know, as obviously demand recovers.
Speaker Change: So my question to you is, you know, as you take a look at the geographic footprint you guys have, as well as the end markets you guys are exposed to.
Speaker Change: Is the leverage the same today as it was in prior years, particularly, you know, as you
Speaker Change: You know, the higher exposure to EVs that China today has and how that today is a lower margin business than it was historically.
Speaker Change: We have a core principle that we believe in having a very efficient manufacturing footprint.
Speaker Change: When we acquired the M&M business, their footprint was not as efficient as what we had historically here at Celany.
Speaker Change: As a combined organization, we are looking at what is the right efficiency profile that we need, and we're overlaying what we believe and where things are at from a demand perspective geographically. And it's that matching that's really critically important. And as a corporation, we are pretty evenly split between America's Europe and Asia in terms of where our revenue comes from.
Unknown Executive, William Cunningham
Very helpful.
For more information visit www.FEMA.gov
Unknown Executive, William Cunningham
Speaker Change: Thank you. Our next questions come from the line of John McNulty with BMO Capital Markets. Please proceed with your question.
Yeah, good morning. Thanks for taking my question. So, Scott.
Speaker Change: When you think about the acetyl capacity that's coming on in Asia, have you seen any offsets where you're seeing
Speaker Change: Closures, you know assets coming down permanently. It looks like there's a significant amount of more capacity still to come so just wondering how that gets placed and or if it's just going to have to be where we wait for demand to to absorb it all.
Speaker Change: We haven't seen, I'd say, permanent capacity reductions. We definitely have seen the industry operating at lower rates. And I think what's a little bit different about this cycle on capacity ads versus what we saw 15 years ago, 15 years ago it was almost all new players to the marketplace.
Speaker Change: This is about 50-50, existing players adding capacity and some new players. And so, obviously, for those with existing capacity, they're kind of flexing their networks up and down based upon what they need. So we have definitely seen probably a little bit more kind of down to match where demand is at.
Speaker Change: Okay, fair enough. And then I guess, do you see there being any risk that that capacity makes its way more meaningfully into other markets? Or does it really kind of stay in the markets that it's been over the last, you know, whatever, the last few years?
Speaker Change: That arbitrage window is not open. And, you know, it's kind of stayed right at or below kind of what it costs to move products and look shipping is expensive and complex.
Speaker Change: and storage is complex as well right now in other markets and so you know just given transit times, etc. We have not seen a lot of that material move out of the region.
Thanks very much for the call.
Speaker Change: Thank you. Our next questions come from the line of Lawrence Alexander with Jeffreys. Please proceed with your questions.
Unknown Executive, William Cunningham
Good morning. So first, on the divestitures, are these
Speaker Change: assets that you've decided you just don't fit in the portfolio and you will exit even if things get better or as things get better would you you keep them and you'll focus on deleveraging through other means?
Speaker Change: kind of the execution issues in the back half of last year, and to the extent that they've been
Speaker Change: changed or fixed? You know, should we see the improvement this summer, regardless of the environment? Or do you need a better level of aggregate demand in order to also fix the execution issues that you've identified?
Speaker Change: Yeah, let me hit your second question first. I wouldn't call them necessary execution issues. I think it was just a length in supply demand, really driven by kind of where demand declined at the at the end of the year. And look, the team's doing everything we can to really flex that model up and down the value chain and look for pockets of opportunity. On your first question around divestitures, look, I think we have identified pieces that are not, you know, critical to kind of those core objectives.
Unknown Executive, William Cunningham, Unknown Executive, William Cunningham, Unknown Executive,
University, present themselves to us.
Thank you.
Speaker Change: Thank you. Our next questions come from the line of John Roberts with Mizuho. Please proceed with your questions.
Unknown Executive, William Cunningham
Unknown Executive, William Cunningham
Speaker Change: Okay, well, it seems like John might be muted. Let's go ahead and make the next question. Can you hear me now?
Speaker Change: We got to hear you now, Scott. Yeah. Sorry. Yeah. Congrats, Scott, and welcome back, Todd and Scott Sutton. Could you talk about the new JV rules in China? We have other companies with China JVs, and I don't recall hearing anything about that. Is it all JVs in China, or is something specific to the selling of Chinese JVs?
Speaker Change: Yeah, I think some JVs have gone through some of this and some haven't. It's really related to the rules that govern certain JVs, and really what changed here is that there's a rule that requires an audit to be completed before dividends can be paid, and so that audit gets completed here in the first part of the year, and so we should see dividends starting in Q2. So that's a rule change that at least our JVs are now subject to.
Speaker Change: Okay, well, Darrell, thanks. Let's make the next question the last one.
Speaker Change: Thank you. You got it. Our last questions will come from the line of Salvador Tiana with the Bank of America. Please proceed with your questions.
Salvador Tiana: Yes, thank you. So, firstly, I want to ask a little bit about, you know, as you're thinking here about, if you got a little bit about the packets of cost savings, I know you mentioned also the 50 million, sorry, the 50 to 100 million from complexity and the 80 million is GNA, but I think last quarter we're talking about
Salvador Tiana: Some of the M&M co-synergies not being realized in 2024 and thus being pushed in 2025, and Clear Lake, obviously the $100 million, also not fully realized last year, in part due to the Fort Majeure.
Speaker Change: Are these part of this baggage you already gave or is there upside from this, especially on the Clear Lake side?
Speaker Change: Look, we achieved $250 million in synergies as we exited last year, Sal, and, you know, we still have more that are in our plan to be realized here this year.
of these actions that have already been executed on.
We are looking at driving productivity every single day.
Speaker Change: looking at every dollar that goes outside of the company and where we can save and where we can prioritize. And and this is a focus on cash. And so that tenacity will continue. Everything is on the table.
Speaker Change: Perfect, and I want to go back to your auto exposure to China, you got a number of questions.
Speaker Change: I'm just wondering, how are things different in China versus Europe and the U.S. when it comes to the OEMs, and a big tailwind for Celanese and others has been obviously lightweighting and replacing metal hood and other components with plastic.
Speaker Change: Is there a bigger or smaller opportunity right now in Chinese autos versus what you had in the Western hemisphere over the past couple of decades?
Speaker Change: Look, there's still a huge opportunity for us in China, and it's why we're continuing to put a heavy focus there. I think, you know, one of the things that that's really important is that the technical requirements.
Speaker Change: of electric vehicles, particularly from a powertrain standpoint, are becoming a lot more demanding. And there's also a lot of other applications where China is moving up this technical requirement curve. You know, this requires materials with higher performance requirements. And we have, you know, really, we believe the best portfolio to match that. And, you know, where our, you know, KPBs sit in China, we're about half of where we are in the Western Hemisphere, and that's moved up substantially the last several years.
Speaker Change: but it is critical that we maintain that focus. Just really since the beginning of the year, we've had two sizable technical exchanges with two of the top five Chinese OEMs as a way to accelerate and drive business. Great thing about China Auto is that commercialization time tends to be much shorter, kind of more like six to 12 months as opposed to 24 months in the Western Hemisphere.
Thank you very much.
Speaker Change: And thank you. Thank you, everyone. We'd like to thank everyone for listening today. As always, we're available after the call for any follow-up questions.
Daryl, please go ahead and close out the call.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.