Q3 2025 Celanese Corp Earnings Call

Speaker #3: Greetings . Welcome to the selling . Corporation . Third quarter 2025 conference call . At this time , all participants are in a listen only mode .

Speaker #3: A question and answer session will follow the prepared remarks . If anyone should require operator assistance during the conference , please press Star Zero on your telephone keypad .

Speaker #3: Please note this conference is being recorded . I would now like to turn the conference over to Bill Cunningham . Thank you . You may begin .

Speaker #5: Thanks , Daryl . Welcome to the Celanese Corp Corporation . Third quarter 2020 Earnings Conference call . My name is Bill Cunningham , vice president of investor relations .

Speaker #5: With me on the call today are Scott Richardson , president and chief Executive Officer . And Chuck Kirsh , chief financial officer . Celanese distributed its third quarter earnings release via business wire and posted , prepared comments , as well as a presentation on our Investor Relations website yesterday afternoon .

Speaker #5: As a reminder , we'll discuss non-GAAP financial measures today . You can find definitions of these measures , as well as reconciliations to the comparable GAAP measures on our website .

Speaker #5: Today's presentation will also include forward looking statements . Please review the cautionary language regarding forward looking statements , which can be found at the end of both the press release and the prepared comments form 8-K reports containing all of these materials have also been submitted to the SEC .

Speaker #5: With that , Darryl , let's go ahead and open it up for questions .

Speaker #3: Thank you . We'll 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 #3: The confirmation tone will indicate your line is in the question queue . You may press star two to remove yourself from the queue for speak for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star keys .

Speaker #3: Our first questions come from the line of David Begleiter with Deutsche Bank . Please proceed with your questions .

Speaker #6: Thank you and good morning and nice quarter for Q3 . Scott , looking at 26 , can you give us an early look at what you can control ?

Speaker #6: What's in your control for 26 and what's not in your control for 26 relative to earnings ? Thank you .

Speaker #7: Yeah . Thank you David . Let me just start by saying how we have focused on 2025 continues into 2026 . You know , the priorities of increasing cash flow , intensifying our our cost improvements and then driving top line growth .

Speaker #7: And that third piece , I think is is going to continue to be more important as we're seeing progress from our M pipeline .

Speaker #7: You know , those are going to be our priorities going in to 26 . And we've laid a really nice foundation here in 2025 .

Speaker #7: And and so that foundation , even if we're in an environment where we see flattish demand and I kind of look at flattish demand on what we've seen , say , Q2 through Q4 here in in 2025 , if we're in that type of demand environment , just to make it easy , you know , I believe we're going to be able to to grow EPs by 1 to $2 next year .

Speaker #7: And and that's going to come from the cost actions that we've already put in place . And that yielding increments next year . And then the second big piece is going to come from , from M pipeline .

Speaker #7: And the success we're seeing driving that , including the high impact program growth , which is starting to yield results . And , you know , certainly we won't have the Micromax EBITDA .

Speaker #7: But I think that's going to be offset by the fact that we don't expect to have the significant auto destocking that we saw in Europe in Q1 of this year .

Speaker #7: So I think when you put it all together , we feel confident in about 1 to $2 , even if the world around us isn't growing .

Speaker #6: Very good . And just on a m pricing the best in eight quarters , discuss how much more there is to go in M on .

Speaker #6: On the pricing front , thank you .

Speaker #7: There's always more that can be done here . David . We have gotten price in some of the standard grade materials in the Western Hemisphere , not as much across the board as we want to see .

Speaker #7: So I think there are still going to be opportunities there. In addition, where we're seeing nice benefits is on the price for the new elements from the pipeline that are being launched.

Speaker #7: So this is going to continue to be a very critical area of focus for us as we go into 2026.

Speaker #6: Thank you .

Speaker #3: Thank you . Our next question is come from the line of Vincent Andrews with Morgan Stanley . Please proceed with your questions .

Speaker #8: Thank you . And good morning . Could you speak a little bit about the operating rates and the acetyl chain ? I know there was a comment in the prepared remarks about sort of flexing Singapore based on on demand and Frankfurt's going to be , I guess , offline for the balance of the year .

Speaker #8: But what do you anticipate or maybe just back up and how what rates did you run at in the second half of this year ?

Speaker #8: And then what do you anticipate in the first half of next year ?

Speaker #7: Yeah . Thanks , Vincent . Not to be flippant , but every day is different in this business . And and I don't say that , you know , as hyperbole .

Speaker #7: It's true . You know , when you look at our lowest cost assets , our lowest cost assets are running at 100% , and then the balance of the network , which is really our asset base outside of the United States , is being flexed to meet demand flex to meet industry conditions .

Speaker #7: And we're going to continue to operate that way . We block operated Singapore as well as Frankfurt . We would expect that to continue going into next year .

Speaker #7: And part of that is our manufacturing team has done an excellent job of being able to continue to operate with high degrees of reliability , as well as , you know , find ways to , you know , no capital D bottleneck .

Speaker #7: Our assets to where , you know , we have more capacity at those lower assets . So , you we're going to continue to flex that to cost demand .

Speaker #7: Our assets to where , you know , we have more capacity at those lower assets . So , you we're going to continue to flex that to cost meet then the rest of the network operating as needed .

Speaker #9: Thank you .

Speaker #3: Thank you . Our next question comes from the line of Jeff Secaucus with J.P. Morgan . Please proceed with your questions .

Speaker #10: Thanks very much . In the Acetyl chain , when you look at sequential pricing through through the year , it's gotten tougher and , you know , prices had come down a lot in China earlier in the year .

Speaker #10: Where is the sequential price pressure coming from in the acetyl chain , either by product line or geography ?

Speaker #7: Yeah . Thanks , Jeff . I think we've seen a little bit of pressure in Europe in kind of what I would say more the downstream .

Speaker #7: So getting into , you know , the vinyls chain B&M and emulsions , as we've worked our way through the year and that was really demand driven as demand has come off .

Speaker #7: We've seen a little bit of pricing pressure there . You know , we've seen a stabilization of pricing in China . Now over the course of the last quarter or so .

Speaker #7: And in fact , pricing went up a little bit here at the beginning of this quarter . Not significantly , but we did see a price lift as we as we got into October , really across all product lines in in China in acetyl .

Speaker #7: So the US has been relatively stable . So that's kind of how I would look at it . It's been more around a function of demand where demand has been weaker .

Speaker #7: And we've seen a little bit of softening of price in Europe .

Speaker #10: Okay . And in engineered materials year over year . You're consolidated volumes were down 8% , which which product lines are , I guess , falling more than that and which product lines are falling less than that .

Speaker #10: Can you help us ? I mean , it might be that there are particular pockets of weakness or is it across the board ?

Speaker #10: Can you talk about that ?

Speaker #7: Yeah , it's mainly the product lines , Jeff , that we have higher levels of volume and have just generally more market exposure in the standard grade materials .

Speaker #7: And so that tends to be more of your engineered thermoplastics . So that's your your palm , your nylon . And then into Gir and polyesters .

Speaker #7: Our thermoplastic elastomers have held up extremely well . And the team has actually found nice pockets of growth there . It's just that's not where we have as much volumetric exposure .

Speaker #7: So it tends to be more on the engineered thermoplastic side of things .

Speaker #10: Great . Thank you so much .

Speaker #3: Thank you . Our next question comes from the line of Mike Sison with Wells Fargo . Please proceed with your questions .

Speaker #11: Hey good morning . Nice third quarter as well for the for 2026 . If I take a look at slide 11 , looks like cost savings could represent somewhere between 40 to $0.50 .

Speaker #11: How much , in terms of the rest of the dollar to $2 , how much comes from potentially lower interest expense and just trying to gauge how much could come from from volume growth from new products .

Speaker #7: Yeah , I mean , given kind of the 1 to $2 that I talked about earlier , Mike , I would look at that's really split largely in two areas .

Speaker #7: One , about half of that is cost . And we didn't put all of the cost actions on that slide . You know , we we have kind of an ambiguous bucket there on that last line of that graph .

Speaker #7: And and I think I would look at there's more to come . You know , we we had the announcement last week about , you know , the enclosure .

Speaker #7: We're continuing to work the cost side of the equation extremely hard . And we'll we'll talk more specifically about those as , as we , you know , complete those actions .

Speaker #7: So about half of its cost . And the majority of the rest of it is , is really coming from the pipeline . And and that's kind of how , you know , we're thinking about things right now .

Speaker #7: I mean , there's there's definitely going to be some things around the edges like interest , etc. , but those are the two big buckets that we're looking at currently .

Speaker #5: And hey, Mike, it's.

Speaker #12: Chuck , the interest expense , I would I would pencil in 30 to $40 million reduction year over year .

Speaker #11: Okay . And then quick follow up in M in terms of the the the volume growth potential , how much is that coming from sort of the legacy , if you can think about it that way .

Speaker #11: The Celanese Corp businesses and then how much comes from some of the DuPont .

Speaker #7: I'll be honest with you , Mike , right now we're looking at that portfolio as all Celanese and and we're not breaking it out .

Speaker #7: We're not operating the business or the company that way anymore . It really is about Celanese and products . What I would say is that engineered Thermoplastics piece in the portfolio , we have there has proven to be a really nice add for us .

Speaker #7: Part of that came from M and M . Part of that came . With Santoprene and that's a really nice area of growth going into next year .

Speaker #7: It's a really important area for us to be differentiating the offerings that we have , and then the so that's been a really nice driver for us .

Speaker #7: And then we are seeing , you know , really as we look at this high impact program area , I mean , there is there's end uses there that are extremely attractive where we're bringing both the engineered thermoplastics .

Speaker #7: So that's both historical Celanese and M , as well as the , the elastomer portfolio to bear in , you know , really high performance type applications , whether that's data centers or in , you know , high , you know , specification EV opportunities , medical opportunities .

Speaker #7: So there's , you know , across these spaces , we're really seeing as we've gotten extremely focused , you know , from a commercial team perspective on these areas , we think we're going to have nice pockets of growth in 26 .

Speaker #11: Thank you .

Speaker #3: Thank you . Our next questions from the line of Ghansham Panjabi with Baird . Please proceed with your questions .

Speaker #13: Thank you . Hi . Good morning everybody . You know hey Scott , just given the evolution of the macro , you know , throughout the course of the year and markets such as building construction and , you know , autos and so on , sequentially weakening .

Speaker #13: Are you starting to see more accelerated inventory destocking at the customer level throughout the year end or our inventory is already pretty low .

Speaker #13: So, what you're measuring is just basically the end markets themselves at this point.

Speaker #14: And .

Speaker #7: Yeah , thanks . You know , as I look at where demand is , it's certainly on a lower base than what we've seen historically .

Speaker #7: But if we look at , you know , what we've called out for seasonality from Q3 into Q4 , you know , on a volumetric and percentage basis , it's it's very similar to what we've seen in the past from Q3 to Q4 .

Speaker #7: So we're not necessarily seeing , you know , accelerated destocking . You know , there's a few pockets , you know , for example , our channel partners here in North America came to us at the beginning of the quarter and talked very openly about , you know , wanting to bring inventories down a little bit by year end .

Speaker #7: And so , you know , that was great that we're able to partner with them . We can take rates down at our asset base .

Speaker #7: And do it really in a thoughtful way . Over the course of the quarter , and not just get to the end and have this big slug down .

Speaker #7: So I think there is there's definitely I would say what pockets . But I wouldn't say it's something we're seeing extensively across the board because we've been seeing this , you know , kind of work its way through the value chain in various areas .

Speaker #7: Now for about six months .

Speaker #13: Okay . Got it . And then maybe a question for Chuck on free cash flow . What's the expectation for working capital contribution for this year in 2025 .

Speaker #13: And then how would you have us think about some of the parameters for 2026 free cash flow ? I think you said at the low end of your guidance for this year .

Speaker #13: Thank you .

Speaker #12: Right , right . Yeah . So working capital so far this year has been a has been a source of cash of 250 million .

Speaker #12: As we've really focused on cash generation . I really don't expect much change in working capital either source or use of cash . So in fourth quarter .

Speaker #12: So I would I would just I would model in zero at this point for , for working capital . As you look ahead for 2026 with that , we don't expect with similar demand levels that we would repeat that 250 million of working capital , source of cash .

Speaker #12: But we are continuing to inventory actions in engineered materials . So there will be some level of of free cash flow source . There .

Speaker #12: You know , at this point , Ghansham our cash outlay of restructuring , which is adjusted out of EBITDA , is looking to be lower in 2026 , as we have some projects that have rolled off from prior footprint .

Speaker #12: So adding to that , the EBITDA improvements that Scott's talked about on the cost and commercial side , that gives us confidence in next year in free cash flow , at least at the low end of that 700 to 800 million range .

Speaker #12: And I think it's important to understand , as we look ahead in the next few years , we think this level of free cash flow is sustainable .

Speaker #13: Okay . Very good . Thank you .

Speaker #3: Thank you . Our next question comes from the line of Patrick Cunningham with Citi . Please proceed with your questions .

Speaker #15: Hi . Good morning . Thanks for taking my questions . The decision for the enclosure , you know , you cited evaluation of longer term and market trends .

Speaker #15: I guess did anything change in terms of your forward view on either the demand or supply side ? And then as you look to evaluate other , more targeted measures than AC , or should we be looking to Frankfurt facility , or do you expect more of a smaller collection of savings across the asset footprint ?

Speaker #7: Yeah . Thanks , Patrick . You know , first of all , I think it's important . Look , we don't take any of these types of decisions lightly .

Speaker #7: You know , we look at , you know , where things are in the near term , long term . And we study them .

Speaker #7: And we also look at , you know , our ability to continue to supply our customers . And , you know , Acetato is faced challenges including declining demand , you know , over a period of time .

Speaker #7: Lanoxin is our highest cost asset . And so , you know , as we looked at where things are , you know , we will we're able to meet all of our customer needs from our network .

Speaker #7: And subsequently drive productivity savings . You know , with this move , both in the short term and long term , no matter you know , what may materialize from a demand perspective .

Speaker #7: And so , you know , this , this closure will yield probably in the neighborhood of 20 to $30 million of productivity savings in 2027 .

Speaker #7: We get a little bit at the end of next year , probably on that . But but certainly for the full year of of 27 , that's the types of savings we're looking at .

Speaker #7: And and we're going to continue to look , you know , across our whole footprint in both businesses , you know , for similar types of examples .

Speaker #7: And so , you know , there's no specific asset I would say that , you know , we're looking at right now , it continues to be kind of cross checking where industry demand is , where is our capacity .

Speaker #7: You know , where do we maybe have excess capacity in the network that will allow us to drive that productivity , but still be able to meet customer demand , even if we were to see a big increase down the road in in recovery period .

Speaker #15: Understood . Very helpful . And then maybe one for Chuck , just in terms of progress on inventory reduction , there's still tracking well towards that goal .

Speaker #15: And then just in some of the context of some of your comments in the prepared remarks , what percentage of SKUs are made to order today versus made to stock ?

Speaker #15: And what goal are you working toward there ?

Speaker #12: Hey , Patrick , look , it's an ongoing it's an ongoing effort to to be a more efficient with inventory . I don't have that percentage right in front of me .

Speaker #12: Of the number of make of make to stock SKUs . But it's one of the several levers that M is working on to reduce inventory .

Speaker #12: It also includes a logistics and warehousing and , you know , testing lead times , etc. .

Speaker #15: Great . Thank you .

Speaker #14: Yep .

Speaker #3: Thank you . Our next questions from the line of Kevin McCarthy with Vertical Research Partners . Please proceed with your questions .

Speaker #16: Yes . Thank you . And good morning . I think you identified 30 to $50 million of additional savings that you're targeting in engineered materials .

Speaker #16: Can you elaborate on on the sources of those and the flow through timing and remind us if those figures are gross or net of inflation ?

Speaker #16: Thanks .

Speaker #7: Yeah . Let me hit the last part of your question . You know , Kevin , I would look at those as net of inflation because we will we'll work inflation through our productivity pipeline to offset that .

Speaker #7: So, look at these as definitely being net. And it is really looking across the board. There is, you know, continued S.G.

Speaker #7: and a and R&D savings there as we you know optimize that side of the business on a global basis . Footprint continues to be an area of focus that will be in there .

Speaker #7: And then , you know , the last area is really , you know , things that we kind of call complexity reduction . So streamlining of our supply chain and our logistics network and really getting that optimized .

Speaker #7: I mean , Chuck just talked about , you know , the benefits we get from that on an inventory reduction . We also get cost reduction from that .

Speaker #7: And so , you know , a good chunk of that , you know , we're going to get , you know , for full year 2026 , some of it will phase in through the year .

Speaker #7: But we definitely are confident that we'll be able to get to those levels next year.

Speaker #16: Great . And then second question for you on divestitures , if I may . Congrats . First of all , on the Micromax deal .

Speaker #16: Looks like you got a multiple for that relative to your own trading multiple . Can you talk about the after tax cash proceeds from that $500 million deal and then more broadly , you know , if we remain in the current environment of I'll call it industrial malaise globally , what additional portfolio actions or at least , you know , the magnitude thereof .

Speaker #16: Are you thinking about over the next several years ? I think you said in your prepared remarks , you are actively pursuing additional .

Speaker #16: So any color on that would be appreciated .

Speaker #7: Yeah . Kevin , let me start and then I'll turn it to Chuck to to answer the tax question . You know , our principles really around divestitures have not changed .

Speaker #7: We have what we believe are two leading franchises here at Celanese and in in Acetyls . It's about leveraging kind of this integrated up and downstream operating model that starts with methanol and acetic acid and goes downstream and is really uniquely , globally positioned to kind of operate to drive value on a daily basis .

Speaker #7: And in engineering materials , it's about driving unique customer solutions and leveraging the , the , the , the globe's leading portfolio around engineered thermoplastics and thermoplastic elastomers .

Speaker #7: So if we have things in the portfolio that are not part of that acetyl value chain or not a differentiated thermoplastic or thermoplastic elastomer , then we are going to to look to see if it's worth more to someone else than what it's worth to us .

Speaker #7: And that has been the principles that we've been operating on now for a number of years around divestitures . And that's what led to the food ingredients transaction .

Speaker #7: That's what's led now to the Micromax transaction , because they didn't fit in the engineering materials business . And that thermoplastic or elastomer bucket JVs is another area that where we don't have as much control and that value that they create to the enterprise is not what the rest of the portfolio creates .

Speaker #7: So that that's the principles that we're operating under . And that's the principles that we'll continue to look at being able to monetize different assets around .

Speaker #7: And , you know , we committed to $1 billion of divestitures by the end of 2027 . And this Micromax transaction , you know , gets us around halfway there .

Speaker #7: And so we are very much in line with achieving that target . And we're going to continue to focus on that here as we finish this year and get into 2026 .

Speaker #12: Yeah . On the on the tax leakage Kevin , that that's expected to be 5% of the final gross sales price .

Speaker #16: Thanks very much .

Speaker #3: Thank you . Our next question is from the line of Salvatore Tiano with Bank of America . Please proceed with your questions .

Speaker #8: Thank you very much . Firstly , you know .

Speaker #17: I want to continue on Kevin's question on divestitures . And you mentioned JVs as a specific area of focus . I'm wondering , though , how do you think about the methanol JV ?

Speaker #17: Because, on the one hand, it is one where you are a partner with someone else; on the other hand, it gives you your main way of being integrated into methanol in the U.S.

Speaker #17: So how strategic is that business to you ?

Speaker #7: Look , so I'm not going to comment on specific joint ventures . You know what what I have said around methanol in the past is it really is about leveraging , you know , methanol and acetic acid and , you know , and so , you know , as we look at all of our joint ventures , we have a partner that is in those JVs .

Speaker #7: And so , you know , JVs can be harder to monetize across the board . And we'll continue to to look at the partners .

Speaker #7: We'll continue to look at other potential counterparties who are interested in having ownerships . You know , of our joint ventures , but , you know , our our focus really is around value creation .

Speaker #7: And so , you know , if value is there to be created and , you know , it is , is is higher than what we believe is inherent in the current and potential future stock price , then we will we will definitely look at it great .

Speaker #17: And I also want to ask about your nylon chain . I know you've been emphasizing nylon polymerization instead doing compounds . So at this point , how much of your nylon volumes and sales perhaps profit comes from actual nylon standard grades versus the compounded value add products ?

Speaker #7: Yeah . Sal , almost all of our profit in that business is is really created by compounds . And so now to make a compound you need polymer .

Speaker #7: And so whether we make that polymer by that polymer , the key is you know , getting that polymer at the most optimized economics possible because we create our value really through that compounding step .

Speaker #17: Thank you very much .

Speaker #3: Thank you . Our next questions from the line of Alexei with KeyBanc Capital Markets . Please proceed with your questions .

Speaker #18: Thank you . Good morning everyone . I just wanted to continue down this line of questioning . I think you just earlier said , Scott , that you don't foresee any major capacity closures , but I recall earlier there was discussion about maybe buy versus make and polymers and potentially some rationalization .

Speaker #18: So, should we take it that the rationalization of polymer capacity is off the table for now, or is that still being considered?

Speaker #7: Now let me be very clear , Alexei . We are taking bold actions across the board , and we have continued to be , I think , through this , this year , every single quarter , you know , we have had another cost reduction announcement .

Speaker #7: We are looking at all elements of our business in both Acetyls as well as in engineered materials , and we will take action around cost , including footprint .

Speaker #7: If there's value creation opportunities , there .

Speaker #18: Okay . Makes sense . And then as a follow up on on your M pricing , I realize it was relatively modest , but do you see any signs of more rational competition ?

Speaker #18: Sort of improvement in competitive environment ? Maybe across any of the markets or types of polymers ?

Speaker #7: Look , we can't control what others are doing . You know what I will say about our M commercial team is they are energized by the opportunity that's in front of them , not just around making sure that we're getting full value for the materials that we sell , but on partnering with our customers about being connected to our customers , being current , about what's happening in the marketplace and being able to respond to customer needs and leverage and drive new solutions and , you know , I think we we believe that that team is going to continue the trajectory that they have been on this year , despite the fact that through the year , you know , the volume side of the equation has been difficult .

Speaker #7: But to be able to drive price drive mix improvement through the year , I think is a great accomplishment and is a really good , you know , starting point for us going into 2026 .

Speaker #7: And we think , you know , we will be able to to drive volumes through the pipeline next year .

Speaker #18: Great . Thanks a lot .

Speaker #3: Thank you . Our next question is come from the line of Frank Mitch with Phormium research . Please proceed with your questions .

Speaker #19: Hey , good morning . And congrats again on the Micromax sale . To that end , Chuck , I believe you indicated that , you know , with the 3 billion plus debt , due 2627 , you were fairly comfortable being able to pay that or you indicated that , you know , given the free cash flow and expected divestitures that you would not need to tap a revolver and that you felt like you would or issue more equity , debt , you'd be able to cover that .

Speaker #19: Do you still feel that way today ?

Speaker #12: Yeah , Frank , I mean , if you look ahead at our 2026 maturities , you know , we've got about 900 million due .

Speaker #12: So when you look at between the Micromax proceeds , the cash , the excess cash we have on hand , Q4 cash generation , those are those are spoken spoken for we've already been looking ahead of the 27 .

Speaker #12: And we've made several payments to our 27 term loan over the last few quarters . We're confident in the cash generation ability to pay off the 27 .

Speaker #12: We do know that sometimes that cash is back and loaded in a given calendar year , so as we've done a few times , we'll continue to be prudent and opportunistic in the debt markets .

Speaker #12: You know , refinancing a small portion of our maturities to align the maturities one two years out with our with our free cash flow generation .

Speaker #12: And that's just to bridge the timing of those repayments. But we're confident that we can generate the cash to pay those off.

Speaker #12: And continue to deleverage .

Speaker #19: Helpful . Thank you . And then , Chuck , if I could ask you a more esoteric question , you know , very sizable write down this quarter .

Speaker #19: You know , I'm reading the press release and it's and it's tied to Zytel and nylon . And then and then in the prepared remarks , it's talking about your stock price and so forth .

Speaker #19: I'm sure others understand what's going on there , but I don't . Can you can you please expand on that . Yeah , sure .

Speaker #12: Frank . Look , the third quarter is our annual quarter to test our goodwill and certain intangibles , you know , like trade names .

Speaker #12: We did this using the same third parties that we that we always do . And we did record an impairment . I think what's important , Frank , is there was not a reduction in the projected cash flows of engineered materials since the last time we did this test , this impairment was really driven by a reduction in our market cap .

Speaker #12: You know , created by a reduction in the stock price because part of the test is sort of a market to book analysis .

Speaker #12: That's used . So no change , no , no decline in the cash flow projections . But it was really driven by the market cap of Celanese .

Speaker #12: .

Speaker #19: Very helpful . Thank you .

Speaker #3: Thank you . Our next question is come from the line of Hassan Ahmed with Alembic Global . Please proceed with your questions .

Speaker #20: Morning , Scott . You know , just wanted to get a bit more granular about , you know , the the sort of near-term guidance .

Speaker #20: I know in the past , you guys had talked about , you know , trying to get to a quarterly EPs run rate of $2 per share imminently , right ?

Speaker #20: So I know , you know , the guidance of this for Q4 , $0.85 to a dollar , you know , bakes in seasonality .

Speaker #20: It's not really a in an otherwise abnormal environment . It's not really sort of the right starting point . So , you know , maybe if we could start with like the dollar 30 for you guys reported in Q3 , right .

Speaker #20: You know , where in the near term you see that going , you know , on a quarterly run rate basis via self-help via obviously now with Micromax , you know , almost about to close reduced interest expense there and the like .

Speaker #20: And again , I understand that you guys are talking about an incremental dollar to $2 . You know , from self-help , which is $0.25 to to to $0.50 .

Speaker #20: But I would love some more granularity around that.

Speaker #7: Yeah . Thanks for the question , Hassan . We continue to be focused around driving controllable actions that will , as a first step , get us back to that , that $2 quarter run rate that hasn't changed even with , you know , where demand is at from a seasonality perspective .

Speaker #7: And we will get there . You know , if demand stays lower , you know , it may take us a little bit longer to get there .

Speaker #7: But if you look at where we were performing in the middle part of the year, Q2 and Q3, from an EPS perspective, and you just take the actions that I've talked about that we have going into next year.

Speaker #7: You know , it starts to really get to a point where you're approaching , you know , kind of that level as you're getting up into the dollar , 75 to $2 range .

Speaker #7: And and that's where , you know , continuing to to to stack wins , as we called them in our prepared comments , additional costs continuing to to drive the pipeline .

Speaker #7: And then if we get any inkling of , of a demand improvement , and even if you were just at the demand levels we saw in the second quarter , you know , you're you're effectively there .

Speaker #7: And so , you know , the multiplying effect of the actions that we're taking are significant . You know , we we look at our enterprise right now as a coiled spring that when released , is going to really drive very substantial and increased earnings levels as we go forward .

Speaker #7: It's tough right now , you know , demand environment is not tough . But I'm extremely proud of the resilience and the actions that the team here at Celanese has taken this year to position us going into next year and beyond .

Speaker #7: .

Speaker #20: Very helpful . Scott . And as a follow up , you know , we'd love to hear your views about anti involution . You know , as it affects the acetyls chain in you guys .

Speaker #20: And and you know , more specifically why I asked this is that , you know , it seems a bit you know , it just yesterday PetroChina it seems came out and announced that they're studying 19 sort of different refining and petrochemical assets to potentially retire .

Speaker #20: And those include methanol assets as well . Right . So it seems it's , you know , it's moving away from the pipe phase and actually becoming real .

Speaker #20: So, how do you see, you know, anti-evolution impacting you guys?

Speaker #7: It's hard to say exactly how it will materialize Hassan . But look the the dialogue on the ground in China and I was there in the quarter and was talking with the team .

Speaker #7: It's it's palpable . More so than I would have expected . You know , I don't know if that it's had a really direct impact thus far .

Speaker #7: I mentioned we've seen , you know , some price movement , albeit small , but some price movement in the quarter . I don't know how much of that is anti-evolution or just kind of normal market changes in some of the inventory getting observed , absorbed after some new plants started up .

Speaker #7: But the the reality of it is , is that people are talking about it there . And I don't know how it , you know , comes in fruition to the business , but I do expect that , you know , we're definitely going to see this be an important step going forward because , you know , I do think the profitability of of assets in China need to be higher than where they are today .

Speaker #20: Very helpful . Scott . Thank you so much .

Speaker #3: UBS thank you . Our thank you . Our next question is come from the line of Josh Spector with UBS . Please proceed with your questions .

Speaker #21: Yeah . Hi . Good morning . I wanted to follow up just on the Acetyls utilization rates . I think my understanding prior was maybe you had rates lower in some of the Western markets .

Speaker #21: So some of your low cost regions like the US to basically react to some of the weaker demand , I guess , you know , your earlier comment was that it's your low cost assets running full out .

Speaker #21: So specifically , can you comment on on that and maybe your US asset base utilization rate where that is today . And then related with that , if we think about what gets utilization rates higher , if you're running at a high rate in the US today , does US demand improvement help you or do you really need Europe or other regions to improve to get your utilization rates up ?

Speaker #7: Yeah , I mean , look , Josh , we've always run our US assets at pretty high rates . That really hasn't changed dramatically .

Speaker #7: And and you know , I'm not saying we don't have room there . You know we probably have a little bit of room .

Speaker #7: But you definitely see the uplift . And when you see Western Hemisphere improvement , the netback is significantly higher than , you know , moving that product around a different regions where , you know , it's better than than running other assets .

Speaker #7: But but certainly us demand flows directly to the bottom line in that case . So we do think your assets are extremely well positioned .

Speaker #7: You know , we we've done debottlenecking in the US asset base over the last five years . And so you know we have the ability to to move those up .

Speaker #7: And when I said full rates I was you know really particularly on acetic acid in the US really referring to you know , we kind of operate that , you know , at kind of the , the capacity that we've historically had , not necessarily operating both acetic acid plants at full rate .

Speaker #7: So , you know , we kind of look at those as , as still operating kind of at the levels they historically did on a combined basis with the ability to ramp up going forward .

Speaker #21: Okay . No , that makes sense . And just a quick follow up on the cost savings side . Just I mean .

Speaker #3: I apologies , it looks like we lost Josh . Our next questions come from the line of Arun Viswanathan with RBC Capital Markets .

Speaker #3: Please proceed with your questions .

Speaker #22: Thanks for taking my question . So if I just go back to that dollar to $2 of uplift , can you just frame that out ?

Speaker #22: I think in the past you had said maybe $0.35 from some of your cost actions. Is that accurate? And then, maybe what would be kind of a restocking amount? Is that also included in there?

Speaker #22: Or maybe or could you maybe frame it as what the destocking amount was for 25 . Thanks .

Speaker #7: Yeah . Arun , as I said earlier on the call , you know , we look at that $1 to $2 , really , as a rule of thumb , if we're not seeing the market really change at all off of where we've been , you know , over the last several quarters .

Speaker #7: So, there's no kind of restock element in there. And what I said earlier is, you know, make the assumption that about half of that is coming from cost actions.

Speaker #7: And then the balance coming from the M pipeline and then some other things , as Chuck mentioned , maybe interest expense .

Speaker #22: Thanks for that. And then could you just also provide an update on maybe some of your recent actions to change the commercial strategy or extend your legacy commercial strategy within E.M?

Speaker #22: ? Maybe on the project pipeline or anything else that we would find relevant to track your progress there? Thanks.

Speaker #7: The M team has been modernizing its strategic orientation. That's the best way I can put it. We're evolving, and just where our world is.

Speaker #7: You know , where we have the ability to really win is in the the differentiated spaces where we can leverage our , you know , widespread , unique , you know , portfolio .

Speaker #7: We have more engineered thermoplastics, more thermoplastics, elastomers, and our inner portfolio than anyone else has in the world. Bringing that full portfolio to customers helps meet the unique challenges they face around solution sets.

Speaker #7: And and it is about partnering and really getting focused around where we spend our time . And then leveraging innovation that we've had .

Speaker #7: You know , we've launched publicly . You know , our our grade selection tool , you know , for customers called Camille , where it's a it's an AI driven tool , which is allowing grade selection around our materials for , for customers as well as our commercial organization to very quickly meet the needs and , and streamline that commercialization cycle .

Speaker #7: And so it's investments we've made in areas like that that are really bringing the M team to the leading edge as it comes to creating new opportunities .

Speaker #7: And partnering with our customers .

Speaker #5: Daryl , we'll make the next question . Our last one , please .

Speaker #3: Thank you . Our last question will come from the line of John Roberts with Mizuho . Please proceed with your questions .

Speaker #23: Thank you . Will the European acetate toe closure have any ripple effects across the rest of the Acetyls network , either upstream or downstream ?

Speaker #23: Maybe some of your JVs .

Speaker #7: No , I would not look at it that way . John .

Speaker #23: Okay . Thank you .

Speaker #5: 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 .

Speaker #5: Daryl , please go ahead and close out the call .

Speaker #3: Thank you, ladies and gentlemen. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time.