Q1 2026 Celanese Corp Earnings Call

May 6, 2026

Operator 2: Greetings, and welcome to the Celanese Q1 2026 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the brief remarks. I will now turn the conference over to Bill Cunningham. Thank you, Bill. You may begin.

Operator: Greetings, and welcome to the Celanese Q1 2026 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. The question and answer session will follow the brief remarks. I will now turn the conference over to Bill Cunningham. Thank you, Bill. You may begin.

Speaker #1: If anyone should require zero on your telephone keypad, please note that this conference is being recorded. I will now turn the conference over to Bill Cunningham.

Speaker #1: Thank you, Bill. You may begin.

Speaker #2: Thanks, Daryl. Welcome to the Celanese Corp first quarter, 2026 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 Kirish, Chief Financial Officer.

Bill Cunningham: Thanks, Daryl. Welcome to the Celanese Corporation Q1 2026 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. Celanese distributed its Q1 earnings release via Business Wire and posted prepared comments as well as a presentation 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 GAAP 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 comments. Form 8-K reports containing all of these materials have also been submitted to the SEC.

Speaker #2: Celanese distributed its first quarter earnings release via Business Wire and posted prepared comments as well as a presentation on our investor relations website yesterday afternoon.

Speaker #2: 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.

Bill Cunningham: You can find definitions of these measures as well as reconciliations to the comparable GAAP 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 comments. Form 8-K reports containing all of these materials have also been submitted to the SEC. With that, Daryl, let's go ahead and open it up for questions.

Speaker #2: 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 #2: Form 8K reports containing all of these materials have also been submitted to the SEC. With that, Daryl, let's go ahead and open it up for questions.

Bill Cunningham: With that, Daryl, 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 1 on your telephone keypad.

Operator 2: Our first questions come from the line of Ghansham Panjabi with Baird. Please proceed with your questions.

Speaker #3: The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to one question and one follow-up question.

Speaker #3: Our first questions come from the line of Gancham Punjabi with Baird. Please proceed with your questions.

Operator: Our first questions come from the line of Ghansham Panjabi with Baird. Please proceed with your questions.

Speaker #4: Thank you, operator. Good morning, everybody. you know, I guess first off, based on your first quarter operating results, it seems like your major end markets are basically weak, apart from some order pattern distortion specific to pre-buys, etc.

Ghansham Panjabi: Thank you, operator. Good morning, everybody. You know, I guess first off, based on your Q1 operating results, it seems like your major end markets are basically weak apart from some order pattern distortions specific to pre-buys, et cetera. As it relates to your guidance for the H2, are you basically assuming that the operating environment reverts back to what you were seeing pre-war? I guess I'm referring specifically to the $3 per share in EPS you're guiding towards for the H2.

Ghansham Panjabi: Thank you, operator. Good morning, everybody. You know, I guess first off, based on your Q1 operating results, it seems like your major end markets are basically weak apart from some order pattern distortions specific to pre-buys, et cetera. As it relates to your guidance for the back half, are you basically assuming that the operating environment reverts back to what you were seeing pre-war? I guess I'm referring specifically to the $3 per share in EPS you're guiding towards for the H2.

Speaker #4: as it relates to your guidance for the back half of the year, are you basically assuming that the operating environment reverts back to what you were seeing pre-war?

Speaker #4: And I guess I'm referring specifically to the $3 per share, in EPS you're guiding towards for the back half of the year.

Speaker #2: Yeah, thanks for the question, Gancham. You know, I think, you know, we've been pretty consistent with where our focus is. And it, it really remains on, you know, cash generation, while we position our businesses for, you know, long-term success.

Scott Richardson: Yeah. Thanks for the question, Ghansham. You know, I think, you know, we've been pretty consistent with where our focus is, and it really remains on, you know, cash generation while we position our businesses for, you know, long-term success. That's because we're in a world where demand continues to be low at an end-use level. Certainly with some of the supply chain disruption that we're seeing here in Q2, you know, we're gonna go capture that. We are really building, you know, something that we believe is very resilient as we go forward. As we look to H2, you know, we ran a lot of different scenarios.

Scott Richardson: Yeah. Thanks for the question, Ghansham. You know, I think, you know, we've been pretty consistent with where our focus is, and it really remains on, cash generation while we position our businesses for, long-term success. That's because we're in a world where demand continues to be low at an end-use level.

Speaker #2: And, and that's because we're in a world where demand continues to be low, at an end-use level. And, and certainly with some of the supply chain disruption, that we're seeing here in the second quarter, you know, we're going to go capture that.

Scott Richardson: Certainly with some of the supply chain disruption that we're seeing here in Q2, we're gonna go capture that. We are really building, you know, something that we believe is very resilient as we go forward. As we look to H2, you know, we ran a lot of different scenarios.

Speaker #2: but we are, are really building you know, something that we believe is very resilient as, as we go forward. So as we look to the second half, you know, we ran, a lot of different scenarios and, you know, as we look at the scenario, we do believe you know, the, the right one to assume in the second half is one where, you know, supply chains, start to unwind here by the end of the quarter, here in Q2.

Scott Richardson: You know, as we look at the scenario, we do believe, you know, the right one to assume in H2 is one where, you know, supply chains start to unwind here by the end of the quarter here in Q2. You see that kind of moderate on where volumes and margins are in H2. We just believe that's the right assumption at this point.

Speaker #2: And, and you see that kind of, moderate on, on where volumes and, and margins are. In the second half. And we just believe that's the, the right assumption at this point.

Speaker #4: Okay, thanks for that, Scott. And then as it relates to, you know, some of the, network moves you've made in terms of ramping up capacity in certain cases in Frankfurt, etc., VAM, you know, VAE, and so on and so forth, what happens in the scenario that demand normalizes?

Ghansham Panjabi: Okay. Thanks for that, Scott. As it relates to, you know, some of the network moves you've made in terms of ramping up capacity in certain cases in Frankfurt, et cetera, VAM, BA, and so on and so forth, what happens in the scenario that demand normalizes? Would you adjust accordingly? You know, given that you're ramping up this capacity again, obviously based on surge demand, et cetera.

Speaker #4: Would you adjust accordingly, you know, given that you're ramping up this capacity again—obviously based on surge demand, etc.?

Speaker #2: Yeah, the words we use internally, Gancham, are being positioned to respond. And that's not just here in Q2. This is how we operate every single day.

Scott Richardson: Yeah. The words we use internally, Ghansham, are being positioned to respond, that's not just here in Q2. This is how we operate every single day. You know, we've run Frankfurt, we've run Singapore as swing units. We also, you know, swing our operating rates in the Acetyl Chain as needed. We pivot our supply chain and Engineered Materials, you know, as customer demand shifts and changes. We're gonna continue to position the company and the day-to-day business where it needs to be to respond. You know, if demand, you know, continues to stay where it is, you know, we've got the assets running where they are. Demand changes, we'll pivot as needed.

Speaker #2: And, you know, we've, we've run Frankfurt, we've run Singapore, as swing units. but we also, you know, swing our operating rates, in the STL chain as needed.

Speaker #2: We pivot our supply chain and engineer materials you know, as, as customer demand shifts and changes. And so we're going to continue to be to position the company and the day-to-day business where it needs to be to respond.

Scott Richardson: We're gonna continue to position the company and the day-to-day business where it needs to be to respond. You know, if demand, you know, continues to stay where it is, you know, we've got the assets running where they are. Demand changes, we'll pivot as needed.

Speaker #2: And so, you know, if demand, you know, continues to stay where it is, you know, we've got the assets running where they are. If demand changes, then we'll pivot as needed.

Speaker #4: Okay, perfect. Thank you for that, Scott.

Patrick Cunningham: Okay, perfect. Thank you for that, Scott.

Ghansham Panjabi: Okay, perfect. Thank you for that, Scott.

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

Operator 2: Thank you. Our next question is coming from the line of Patrick Cunningham with Citi. Please proceed with your questions.

Operator: Thank you. Our next question is coming from the line of Patrick Cunningham with Citi. Please proceed with your questions.

Patrick Cunningham: Hi, good morning. You know, your US production at Clear Lake has a pretty significant advantage. I guess, you know, how have operating rates trended in Q1, how are they, you know, progressing into Q2? I'm just curious if there are any limiting factors to maximizing those rates or any logistics bottlenecks you foresee across the complex.

Speaker #5: Hi, good morning. You know, your US production at Clear Lake has a pretty significant advantage. I guess, you know, how have operating rates trended in the first quarter and, you know, how are they, you know, progressing into Q2?

Speaker #5: And I'm just curious if there are any limiting factors to maximizing those rates or, or any logistics bottlenecks you foresee across the complex.

Speaker #4: Yeah, thanks, Patrick. It, it really is about reliability of supply for our customers. And, you know, Clear Lake is a great asset that can flex.

Scott Richardson: Thanks, Patrick. It really is about reliability of supply for our customers. You know, Clear Lake is a great asset that can flex, you know, really across the products that we make there. We've got downstream assets positioned around the world that can also flex. As I just mentioned on the previous question, you know, Frankfurt is one of those assets that, you know, we block operated in a way that can flex as needed. We're gonna continue to adjust those rates as needed. As you can imagine, just given where, you know, some of the supply chain challenges have been this quarter, you know, Clear Lake is running at a relatively high utilization rate.

Speaker #4: you know, really across the products that we make there. and then we've got downstream assets positioned around the world, that can also flex. And as I just mentioned on the previous question, you know, Frankfurt is one of those assets that, you know, we block operated in a way that can flex as needed.

Speaker #4: And, and we're going to continue to adjust those rates as needed. As you can imagine, just given where, you know, some of the supply chain challenges have been this quarter, you know, Clear Lake is running at a relatively, high utilization rate.

Scott Richardson: We're gonna continue to adjust those rates as needed. As you can imagine, just given where, you know, some of the supply chain challenges have been this quarter, you know, Clear Lake is running at a relatively high utilization rate.

Speaker #5: Got it. And then just on, on EM, can you talk a little bit about the playbook, you know, in sort of response or in context of the crisis in terms of pricing, share gain opportunities, you know, how has the nylon 6'6" market performed and, you know, any meaningful change in supply or, or trade flow dynamics at this point?

Patrick Cunningham: Got it. Then just on EM, can you talk a little bit about the playbook, you know, in sort of response or in context of the crisis in terms of pricing, share gain opportunities? You know, how has the Nylon 6,6 market performed? You know, any meaningful change in supply or trade flow dynamics at this point?

Speaker #2: Yeah, look, how we look at our EM business is these, these are the right products, at the right time, to drive growth in a world that is, you know, challenged for growth.

Scott Richardson: Yeah, look, how we look at our EM business is these are the right products at the right time to drive growth in a world that is, you know, challenged for growth. We do that by ensuring that we've got the right segment focus and then kind of drill down below that into a sub-segment focus. You know, we are extremely well-positioned with the asset base from a compounding standpoint, which is where, you know, we create the most values in that last step of the process. Our assets are extremely well-positioned in each region. You know, we are able to move polymer or buy polymer in each region to be able to, you know, adjust as, you know, certain products may have scarcity because of supply chain challenges.

Speaker #2: And, and we do that, by ensuring that we've got the right segment focus and then kind of drill down below that into a subsegment focus.

Speaker #2: And, you know, we are extremely well positioned with the asset base, from a compounding, standpoint, which is where, you know, we create the most values in that last step of the process.

Speaker #2: Our assets are extremely well positioned in each region. And so, you know, we, our able to move polymer or buy polymer, in each region to be able to, you know, adjust as, you know, certain products may have scarcity because of supply chain challenges.

Scott Richardson: Our assets are extremely well-positioned in each region. You know, we are able to move polymer or buy polymer in each region to be able to, you know, adjust as, you know, certain products may have scarcity because of supply chain challenges.

Scott Richardson: You know, be able to, you know, adjust pricing, to deal with, you know, rising feedstock costs. You know, it does tend to take a quarter or two for those feedstocks to really fully flow through in the Engineered Materials business. It was important that we work to try to get ahead of that from a pricing standpoint now.

Speaker #2: you know, or be able to, you know, adjust pricing, to deal with, you know, rising feedstock costs. And, you know, it does tend to take, a quarter or two for those feedstocks to really fully flow through in the engineered materials business.

Speaker #2: And so it was important, that we work to try to get ahead of that from a pricing standpoint now.

Speaker #3: Thank you. Our next question is coming from the line of Jeff Secaucus with JPMorgan. Please proceed with your questions.

Operator 2: Thank you. Our next question is coming from the line of Jeff Zekauskas with J.P. Morgan. Please proceed with your questions.

Operator: Thank you. Our next question is coming from the line of Jeff Zekauskas with J.P. Morgan. Please proceed with your questions.

Jeff Zekauskas: Thanks very much. Can you talk about the prospects for Ibn Sina and how that will affect your Engineered Materials, EBIT or EBITDA or equity income?

Speaker #4: thanks very much. can you talk about the prospects for Ibn Sina and how that will affect your engineered materials EBIT or EBITDA or equity income?

Jeff Zekauskas: Thanks very much. Can you talk about the prospects for Ibn Sina and how that will affect your Engineered Materials, EBIT or EBITDA or equity income?

Speaker #2: Yeah, thanks, Jeff. when you look at Ibn Sina in 2025, they actually had a fairly large turnaround. So earnings were a little bit lower last year.

Scott Richardson: Yeah, thanks, Jeff. When you look at Ibn Sina, in 2025, they actually had a fairly large turnaround, so earnings were a little bit lower last year. Right now, as we estimate earnings, you know, 2026 versus 2025, we're assuming pretty much flattish, Jeff, on what rolls through equity earnings right now. Now the plant, most of the assets there, have not been operating for the last 6 weeks or so because of shipping constraints as well as raw material feedstock disruption. You'll have to see kind of where that goes here into the H2.

Speaker #2: And so right now, as we estimate, earnings, you know, 20, 2026 versus 2025, we're assuming pretty much flattish, Jeff, on what rolls through equity earnings right now.

Speaker #2: now the, the plan most of the assets there, have not been operating, for the last six weeks, or so because of, of shipping constraints as well as, raw, raw material feedstock disruption.

Speaker #2: And so, you'll have to see kind of where that, goes here into the second half. But given the fact that we are on a one-quarter lag there, you know, and the fact that 2025 was, was a, was a pretty low number, you know, we're right now assuming flattish.

Scott Richardson: Given the fact that we are on a 1-quarter lag there, you know, and the fact that 2025 was a pretty low number, you know, we're right now assuming flattish.

Jeff Zekauskas: Okay, great. Then in the Acetyl Chain, in Q2, you're going to make maybe a little less than $200 million more. Can you analyze that in terms of, is it more acetic acid? Is it more VAM? Is it more China? Is it more US exports? Can you give us an idea of how that improvement in the Acetyl Chain flows?

Speaker #4: Okay, great. And then in the acetyl chain, in the second quarter, you're, you're going to make, you know, maybe a little less than 200 million dollars more.

Speaker #4: Can, can you analyze that in terms of is it more acetic acid? Is it more VAM? Is it more China? Is it more US exports?

Speaker #4: It, it can you give us an idea of how that improvement in the acetyl chain flows?

Speaker #2: Yeah, so I would say it's, it's not, really dissimilar to kind of fundamentally how the business operates, you know, in most quarters. You know, the majority of the profit, as we've said in the past, comes from the Western Hemisphere.

Scott Richardson: Yeah. I would say it's not really dissimilar to kind of fundamentally how the business operates, you know, in most quarters. You know, the majority of the profit, as we've said in the past, comes from the Western Hemisphere. I think the lift here from Q1 to Q2 is definitely weighted heavier towards the Western Hemisphere as well. It's that, you know, low-cost advantage that we have in our asset base in Clear Lake and being able to utilize that, you know, across the Western world. We have seen, you know, margins move up in Asia as well. I would say, you know, from a product standpoint, Jeff, very much disproportionate to the vinyls chain. Think VAM downstream into vinyl emulsions and then redispersible polymer powders.

Speaker #2: And I think the, the lift, here from Q1 to Q2 is, is definitely weighted, heavier, towards the, the Western Hemisphere as well. And, it's that, you know, low-cost advantage that we have in our asset base, in, in Clear Lake and being able to utilize that, you know, you know, across the, the Western world, we have seen, you know, margins move up, in, in Asia as well.

Scott Richardson: We have seen, you know, margins move up in Asia as well. I would say, you know, from a product standpoint, Jeff, very much disproportionate to the vinyls chain. Think VAM downstream into vinyl emulsions and then redispersible polymer powders.

Speaker #2: I would say, you know, from a product standpoint, Jeff, very much disproportionate to the vinyls chain. So think VAM, downstream into vinyl emulsions, and then redispersible powders.

Speaker #2: So, you know, again, not dissimilar to how we've talked about the business to being, you know, a lot of the profitability coming less from, you know, selling acetic acid as acetic acid, but really monetizing downstream, and then seeing pockets of growth opportunity.

Scott Richardson: You know, again, not dissimilar to how we've talked about the business to being, you know, a lot of the profitability coming less from, you know, selling acetic acid as acetic acid, but really monetizing downstream, and then seeing pockets of growth opportunity. You know, we've talked over the last year or so about the importance of vinyl emulsions as well as powders kind of being a very small pocket of growth in certain parts of the world, and we're definitely seeing that right now. You know, vinyl's chemistry has a nice advantage in a higher oil environment over competing systems. We're seeing and working with customers on, you know, growth opportunities to drive some switching as well. You know, that's really where that focus is much more downstream in the product portfolio.

Speaker #2: you know, we've talked over the last year or so about, the importance of vinyl emulsions as well as powders kind of being a very small pocket of growth in certain, parts of the world.

Speaker #2: And we're definitely seeing that right now. And, you know, vinyls chemistry has a nice advantage in a higher oil environment over competing systems. And so we're seeing and working with customers on, you know, growth opportunities to, to, to drive some switching as well.

Scott Richardson: You know, vinyl's chemistry has a nice advantage in a higher oil environment over competing systems. We're seeing and working with customers on, you know, growth opportunities to drive some switching as well. You know, that's really where that focus is much more downstream in the product portfolio.

Speaker #2: And so, you know, that's really where that focus is, much more downstream in the product portfolio.

Speaker #4: Great. Thank you very much.

Jeff Zekauskas: Great. Thank you very much.

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

Operator 2: Thank you. Our next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your questions.

Operator: Thank you. Our next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your questions.

Vincent Andrews: Thank you, and good morning. Wanted to ask on the second half in EM, there's some comments in the prepared remarks about, you know, what you're doing on the nylon side of the equation, that you expect some inventory drawdowns and some structural inventory reductions they're already underway. Is that coming on the customer side of the equation? You think that's gonna accelerate because you're gonna be reducing capacity? If you could just color in some of those lines for us, that'd be helpful.

Speaker #5: thank you and good morning. I wanted to ask on the, the second half in EM, there's some comments in the prepared remarks about, you know, what you're doing, on the nylon side of the equation that you expect some inventory drawdowns.

Speaker #5: And some structural inventory reductions that are, that were already underway. So, is that coming on the customer side of the equation? And do you think that's going to accelerate because you're going to be reducing capacity?

Speaker #5: If you could just color in some of those, lines for us, that'd be helpful.

Speaker #2: Yeah. Hey, Vincent. Yeah, in the second half, in engineered materials, we would expect an additional, you know, 50 million dollars of absorption hit on the income statement.

Scott Richardson: Hey, Vincent. In H2, in Engineered Materials, we would expect an additional, you know, $50 million of absorption hit on the income statement. That is from drawing that nylon from the transition. We've had, as you know, some other structural inventory reduction actions underway, right? I would say even with all that, we are targeting to grow EM this year, which will more than offset, you know, these absorption hits over the year, which is about $35 million, the turnaround expense, which is about $15 million here coming in Q2, you know, potential raw material cost pressures that Scott talked about or even demand pullback, also offsetting the Micromax earnings, right? At the same time, I think it's important to remember we're also fortifying the base in EM.

Chuck Kyrish: Hey, Vincent. In H2, in Engineered Materials, we would expect an additional, you know, $50 million of absorption hit on the income statement. That is from drawing that nylon from the transition. We've had, as you know, some other structural inventory reduction actions underway, right? I would say even with all that, we are targeting to grow EM this year, which will more than offset, you know, these absorption hits over the year, which is about $35 million, the turnaround expense, which is about $15 million here coming in Q2, you know, potential raw material cost pressures that Scott talked about or even demand pullback, also offsetting the Micromax earnings, right?

Speaker #2: That is from drawing that nylon from the transition. But we've had, as you know, some other structural inventory, production actions underway, right? So, yeah, I would say even with all that, we are targeting to grow EM this year, which will more than upset, you know, these, so absorption hits over the year, which is about 35 million dollars, the turnaround expense, which is about 15 million dollars here coming in Q2, you know, potential raw material cost pressures that Scott talked about or even demand pullback.

Speaker #2: And also offsetting, the micro max earnings, right? So, you know, at the same time, I think it's important to remember we're, we're also fortifying the base, NEM, you know, reducing costs, reducing complexity, taking this inventory, you know, permanently out of the system.

Chuck Kyrish: At the same time, I think it's important to remember we're also fortifying the base in EM. You know, reducing costs, reducing complexity, taking this inventory, you know, permanently out of the system. It's really, you know, it's really been in the plan and in place, you know, for some time.

Scott Richardson: You know, reducing costs, reducing complexity, taking this inventory, you know, permanently out of the system. It's really, you know, it's really been in the plan and in place, you know, for some time.

Speaker #2: So it's really, you know, it's really been an, an, in the plan and in place, you know, for, for some time.

Speaker #5: Okay. And if I could just, follow up on the acetyl chain, I, I didn't, I don't think I saw this in prepared remarks. Does the second half assume that you're still running Frankfurt for the full second half, or does it assume some, some reduction in operations there?

Vincent Andrews: Okay. If I could just follow up on the Acetyl Chain. I don't think I saw this in prepared remarks. Does H2 assume that you're still running Frankfurt for the full H2, or does it assume some reduction in operations there?

Speaker #2: Yeah, Vincent, there's, there's different scenarios that could potentially play out. and so we are assuming that Frankfurt's going to operate, into the second half, at this point.

Scott Richardson: Yeah, Vincent, there's different scenarios that could potentially play out. We are assuming that Frankfurt's gonna operate into H2 at this point. We do have some turnaround activity in 2 of our VAM units around the world. We've got both the US VAM units in turnaround, you know, between now and the end of the year. Just depending on where demand is at will determine, you know, what that Frankfurt operating rate schedule will look like. But certainly, the expectation is that it's gonna operate into H2.

Speaker #2: We do have some turnaround activity, in two of our VAM units around the world. We've got, both the US VAM units in turnaround, you know, between now and the end of the year.

Speaker #2: And so just depending on where demand is at, will determine, you know, you know, what that Frankfurt operating rate schedule will look like. And, but, but certainly, the expectation is, is that it's going to operate into the second half.

Speaker #5: Okay. Thank you very much.

Vincent Andrews: Okay. Thank you very much.

Speaker #3: Thank you. Our next question is coming from the line of Michael Sasson with Wells Fargo. Please proceed with your question.

Operator 2: Thank you. Our next question has come from the line of Michael Sison with Wells Fargo. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Michael Sison with Wells Fargo. Please proceed with your questions.

Speaker #6: Hey, guys. I started the year. in terms of the second half, j-j-just curious, i-i-it's nothing really changes in, you know, in terms of, the conflict here.

Michael Sison: Hey, guys. Nice start to the year. In terms of H2, just curious, if nothing really changes in, you know, in terms of the conflict here, does the run rate in Q2 for EPS kind of mirror Q3? Meaning, does Q3 look like Q2, and then you sort of have a bigger drop in Q4 to get to your $3? Are you assuming things get better and we're kind of $1.50, $1.50?

Speaker #6: D-does the run rate in Q2 for EPS kind of mirror, third quarter, meaning this third quarter, look like second quarter and then, you sort of have a, a bigger drop in the fourth to get to your $3?

Speaker #6: Or, or is it, or are you assuming things get better and we're kind of a buck 50, buck 50?

Speaker #2: Yeah. Let me, let me hit, you know, kind of a high level there, Mike, and then I'll turn it to Chuck to talk about, kind of the cadence.

Scott Richardson: Let me, let me hit, you know, kind of a high level there, Mike, then I'll turn it to Chuck to talk about kind of the cadence. As we look at the H2 guide, it was really kind of looking at a scenario where, you know, we start to see some of the unwinding of the supply chains here by the end of Q2, then kind of continuing into the Q3 and then into the Q4. Your question is, if we see things kind of stay, you know, where they are, I would look at how we think about our business. I mentioned that position to respond earlier. It's kind of like a coiled spring. If the opportunity is there, then we're gonna release that spring.

Speaker #2: you know, as we look at the second half guide, it was really kind of looking at a scenario where, you know, we start to see some of the unwinding of the supply chains here.

Speaker #2: By the end of Q2, and then kind of continuing into the third quarter, and then into the fourth quarter, you know, your question is, if we see things kind of stay, you know, where they are, you know, I would look at, you know, how we think about our business.

Scott Richardson: Your question is, if we see things kind of stay, you know, where they are, I would look at how we think about our business. I mentioned that position to respond earlier. It's kind of like a coiled spring. If the opportunity is there, then we're gonna release that spring. You know, if things stay where they are, you know, from a demand and a supply chain standpoint, there's certainly upside in the H2.

Speaker #2: I, I mentioned that, position to respond earlier. It's kind of like a coiled spring. And if the opportunity is there, then we're going to release that spring.

Speaker #2: And so, you know, if, if things stay where they are, you know, from a, from a demand and a supply chain standpoint, then there's certainly upside in the, in the second half.

Scott Richardson: You know, if things stay where they are, you know, from a demand and a supply chain standpoint, there's certainly upside in the H2. Mike. Based on the guide, look, there's a lot of moving parts and a lot of uncertainty, but I think probably the easiest way to think about it right now is if you look at normal seasonality in any given year, you know, Q3 versus Q4, it's about $25, 30 million in each business. I think for now that's a pretty good place to start. You know, wouldn't be surprised to see, you know, similar pattern this year.

Speaker #6: Yeah, Mike. Yeah. Based on the guide look at, there's a, there's a lot of moving parts and a lot of uncertainty. But I think probably the easiest way to think about it right now is if you look at normal seasonality, in any given year, you know, Q3 versus Q4, it's about 25, 30 million dollars in each business.

Chuck Kyrish: Mike. Based on the guide, look, there's a lot of moving parts and a lot of uncertainty, but I think probably the easiest way to think about it right now is if you look at normal seasonality in any given year, you know, Q3 versus Q4, it's about $25, 30 million in each business. I think for now that's a pretty good place to start. You know, wouldn't be surprised to see, you know, similar pattern this year.

Speaker #6: And I think for now, that's a pretty good place to start. You know, I wouldn't be surprised to pattern this year.

Michael Sison: Got it. Just to follow up on Clear Lake. I recall, you know, Clear Lake 2 was running full out or running pretty high. Is Clear Lake 1 now sort of ramped fully up to sort of take advantage of the higher pricing and such? Where are industry margins now relative to, you know, the past peaks?

Speaker #5: Got it. And then, just, just to follow up on Clear Lake, I, I, I recall, you know, Clear Lake 2 was running full out or, or running pretty high.

Speaker #5: Is, is Clear Lake 1 now sort of ramped fully up to sort of take advantage of the, you know, higher pricing and, and, and such?

Speaker #5: And then, where, where are industry margins now relative to, you know, the, the past peaks?

Speaker #2: Yeah, Mike, let me answer your last question first. You know, certainly, we are nowhere near, kind of, past peak demand levels globally or mid-cycle demand levels globally.

Scott Richardson: Yeah, Mike, let me answer your last question first. You know, certainly, we are nowhere near kind of what would be past peak demand levels globally or mid-cycle demand levels globally. I would not necessarily compare that to, you know, past periods from a margin or a volume perspective. You know, in terms of your first question, I would go back to the answer to Jeff's question, is the majority of, you know, the opportunities that we're seeing are more downstream from acetic acid in, you know, the vinyls chain.

Speaker #2: And so, I would not necessarily compare that to, you know, past periods from, a margin or a volume perspective. And, you know, in terms of your first question, I would go back to, to the answer to, to Jeff's question, is the majority of, you know, the opportunities that we're seeing are more downstream from acetic acid in, you know, the vinyls chain?

Speaker #2: And so, you know, as we look at Clear Lake operating rates, you know, we've got you know, both of those assets that we have there, kind of dialed in at the right level.

Scott Richardson: You know, as we look at Clear Lake operating rates, you know, we've got Both of those assets that we have there, kind of dialed in at the right level, to get the optimal usage, et cetera, and efficiency that we want from both assets and being able to pivot up or down as needed. Really it's more of a downstream opportunity that we're seeing as opposed to, you know, fundamental acetic acid demand.

Speaker #2: to get the, the, the, the optimal, usage, etc., and efficiency that we want, from both assets and being able to pivot, up or down as needed.

Speaker #2: So, really, it's more of a downstream opportunity that we're seeing as opposed to, you know, fundamental, acetic acid demand.

Speaker #6: Okay. Thank you.

Michael Sison: Okay. Thank you.

Speaker #3: Thank you. Our next question is coming from the line of David Begleiter with Deutsche Bank. Please proceed with your questions.

Operator 2: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your questions.

Operator: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your questions.

Speaker #7: Thank you. Good morning. Scott, some of your, peers have talked about 9 to 12 months until supply chains normalize post the end to the conflict.

David Begleiter: Thank you. Good morning. Scott, some of your peers have talked about nine to twelve months until supply chains normalize post the end to the conflict. Looks like you're targeting maybe a shorter timeline, sorry, to normalization Acetyls. Can you talk to that timeline you're looking at? Thank you.

Speaker #7: Looks like you're targeting maybe a, a shorter, timeline. Sorry, two normalization, acetyls. Can you talk to that, timeline you're looking at? Thank you.

Speaker #2: Yeah. Thanks, David. Look, it's about scenario planning. And there's a lot of different, you know, scenarios that could play out. And, you know, as you, as you kind of look at, you know, the assumptions that we've made here, that, you know, we, we start to things begin to unwind.

Scott Richardson: Yeah. Thanks, David. Look, it's about scenario planning, there's a lot of different, you know, scenarios that could play out. You know, as you, as you kind of look at, you know, the assumptions that we've made here that, you know, we start to things begin to unwind, and that begin of that unwinding, it depends on what that kind of decline curve looks like in terms of volume and price based upon, you know, the speed of that unwinding. I think that is uncertain right now. We felt like it was important to be prudent in terms of how things could play out, because there's also a potential offset to demand. With feedstock prices high, and where they are, you know, there could be an impact to underlying demand.

Speaker #2: And that begin of that, of that unwinding, it just, it depends on what that, kind of decline curve looks like in terms of, of volume and price based upon, you know, the speed of that unwinding.

Speaker #2: And I think that is uncertain. right now. But we felt like it was important to be prudent, in terms of how things could play out because there's also a potential offset to demand with feedstock prices high, and where they are.

Scott Richardson: I think that is uncertain right now. We felt like it was important to be prudent in terms of how things could play out, because there's also a potential offset to demand. With feedstock prices high, and where they are, you know, there could be an impact to underlying demand.

Speaker #2: You know, there could be an impact to underlying demand. And so, you know, we kind of put all those things out there. And again, you know, felt like it was the, the prudent, you know, guide for the second half.

Scott Richardson: You know, we kind of put all those things out there, and again, you know, felt like it was the prudent, you know, guide for H2. Also, as I said earlier, you know, look, we are ready, and our team has done a great job of responding to the environment here in Q2. If we see that environment continue, then we'll go capture that upside.

Speaker #2: But also, as I said earlier, you know, look, we are ready. And, and our team has done a great job of responding to the environment here in the second quarter.

Speaker #2: And if we see that en-environment continue, then we'll go capture that upside.

Speaker #7: Very good. And just on EM, you've announced some price increases. So what's the cadence of, price cost as we go through Q2? Are you ahead, behind, or neutral?

David Begleiter: Very good. Just on EM, you've announced some price increases. What's the cadence of price cost as we go through Q2? Are you ahead, behind, or neutral? How does it go into the back half of the year? Thank you.

Speaker #7: And how’s it going into the back half of the year? Thank you.

Speaker #2: Yeah. We're starting to get, some of that price flowing through. You know, as it, it, it is, kind of a slow uptick here in the second quarter.

Scott Richardson: We're starting to get some of that price flowing through, you know, it is a kind of a slow uptick here in Q2. It's important that, you know, we really begin to achieve that because the cost, while flowing through a little bit here in Q2, is gonna hit us heavier in Q3. I think we should see that, you know, hopefully fully materialize in the P&L in Q3. It's important, you know, as we exit Q2, that we're achieving the maximum amount of that price. We're certainly on the trajectory there. You know, the next 6 weeks here as we finish the quarter are gonna be really important in that equation.

Speaker #2: But it's important that, you know, we, we really begin to achieve that because the cost, while flowing through a little bit here in Q2 is going to hit us heavier i-in Q3.

Speaker #2: And I think we should see that, you know, hopefully mid fully materialize in the P&L in the third quarter. And so it's important, you know, as we exit Q2, that we're achieving the maximum amount of that price.

Scott Richardson: It's important, you know, as we exit Q2, that we're achieving the maximum amount of that price. We're certainly on the trajectory there. You know, the next 6 weeks here as we finish the quarter are gonna be really important in that equation.

Speaker #2: So we're certainly on, on the trajectory there. but, you know, the next six weeks here, as we finish the quarter, it'll be really important in that equation.

Speaker #7: Thank you.

David Begleiter: Thank you.

Speaker #3: Thank you. Our next question is coming from the line of Frank Mitch with Fermium Research. Please proceed with your question.

Operator 2: Thank you. Our next question has come from the line of Frank Mitsch with Fermium Research. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Frank Mitsch with Fermium Research. Please proceed with your questions.

Frank Mitsch: Terrific. Thank you. Actually David's question leads nicely into what I wanted to ask about, and that's on the Acetyl side of things. As you look at Q2, my assumption, and please correct me and expand upon it, is that, you know, you're raising price in the Acetyls upstream and downstream, and the expectation would be that you're gonna end Q2 at a higher price level than what the Q2 average would be, such that we're gonna start Q3 at a higher level. A couple questions. Is that, is that how you're thinking about it as well? You know, based on your prudent guidance, are you factoring some measure of price degradation in Q3?

Speaker #8: terrific. Thank you. And, and actually, David's question leads, nicely into, what I wanted to ask about. And that's on the acetyl side of things.

Speaker #8: I mean, as you look at the second quarter, my assumption and, and, and please correct me, and expand upon it, is that, you know, you're raising price in the acetyls, upstream and, and downstream.

Speaker #8: And the expectation would be that you're going to end the second quarter at a higher price level than what the two-quarter average would be, such that we're going to start Q3 at a higher level.

Speaker #8: I mean, so a couple of questions. Is that, is that how you're thinking about it as well? And, you know, based on your, prudent guidance, are you factoring some measure of price degradation in the third quarter?

Frank Mitsch: A couple questions. Is that, is that how you're thinking about it as well? You know, based on your prudent guidance, are you factoring some measure of price degradation in Q3? How do you think about, you know, the price balance on Acetyls and how we're going to enter the H2?

Speaker #8: Or how, how do you think about, you know, the, the, the, the price, balance on, on acetyls and, and, and how we're going to enter, the second half?

Frank Mitsch: How do you think about, you know, the price balance on Acetyls and how we're going to enter the H2?

Speaker #2: Yeah, Frank. I, I don't know on a global basis that that necessarily is the right assumption. You know, we've, we've already seen, pricing in China, start, to moderate, you know, as from where it was in, at the beginning of April.

Scott Richardson: Yeah, Frank, I don't know on a global basis that that necessarily is the right assumption. You know, we've already seen pricing in China start to moderate, you know, as from where it was at the beginning of April. Actually, I don't think on a global basis that's actually kind of the case of where things will be. I think, you know, we'll probably see that price in Asia stay where it is or possibly moderate a little more as we work our way through the quarter. In the Western Hemisphere, you know, where pricing is now is probably similar to where it will be at the end of the quarter, you know, depending on where, you know, competitive dynamics are.

Speaker #2: so actually, I don't think on a global basis that's actually kind of the case of where things will be. I think, you know, we'll probably see that, that price in, in Asia stay where it is or, or possibly moderate a little more as we work our way through the, the quarter.

Speaker #2: in the Western Hemisphere, you know, where pricing is now is probably similar to where it will be, at the end of the quarter. you know, depending on where, you know, competitive dynamics are.

Scott Richardson: In the Western Hemisphere, you know, where pricing is now is probably similar to where it will be at the end of the quarter, you know, depending on where, you know, competitive dynamics are. I actually think, you know, where we were in April was probably the higher watermark, just as we look at the cadence today.

Scott Richardson: I actually think, you know, where we were in April was probably the higher watermark, just as we look at the cadence today.

Speaker #2: So I, I actually think, you know, where we were in April was probably, the higher watermark, just as we look at, the cadence, today.

Frank Mitsch: I understand what you're saying about China. My understanding is that some of that was also demand destruction. You know, you can't sell the products downstream, at least here in the near term. In the Western world, would you assume that, you know, in North America, that you would give back something on price in Q3?

Speaker #8: I understand what you're saying about China. My understanding is that some of that was also demand destruction. so they actually don't have, you know, you, you can't sell the products downstream, at least here in the near term.

Speaker #8: But, from a in the Western world, you're would you assume that, you know, in North America, that you would give back something on price, in the third quarter?

Speaker #2: I think it's TBD, Frank. I think, you know, I think volume we've got a, a moderation of margins and price as you work your way through the third quarter.

Scott Richardson: I think it's TBD, Frank. I think we've got a moderation of margins and price as you work your way through the third quarter. Just from a normal seasonality standpoint, Q2 tends to be the highest quarter from a volumetric perspective, typically in Acetyls. You would normally have some volume come off in Q3 from a seasonality perspective through the holiday period. We've kind of factored some of that into the assumptions for Q3.

Speaker #2: just from a normal seasonality standpoint, Q2 tends to be, the highest quarter from a volumetric perspective, typically in acetyls. So, you know, you would normally have, you know, some volume, you know, come off in Q3 from a seasonality perspective through the holiday period.

Speaker #2: And so, you know, we've kind of factored, you know, some of that into the assumptions for Q3.

Speaker #8: Thank you so much, Scott. Appreciate it.

Frank Mitsch: Thank you so much, Scott. Appreciate it.

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

Operator 2: Thank you. Our next question is coming from the line of Hassan Ahmed with Alembic Global. Please proceed with your questions.

Operator: Thank you. Our next question is coming from the line of Hassan Ahmed with Alembic Global. Please proceed with your questions.

Speaker #9: Morning, Scott. you know, just wanted to sort of dig a little deeper about this, sort of, uneven sort of pricing dynamic regionally that you guys talked about, within ACETIC.

Hassan Ahmed: Morning, Scott. You know, just wanted to sort of dig a little deeper about this sort of uneven sort of pricing dynamic regionally that you guys talked about within Acetate. I mean, my understanding is that, you know, as I take a look at the raw material side of things, you know, just in the Middle East alone, there seems to be 26 to 27 million tons of methanol capacity that is offline, right? Obviously, methanol pricing across the globe has risen quite rapidly, including China, right? I'm just trying to understand this recent dip that we've seen, particularly in Chinese spot acetic pricing. You know, where are the margins there? Are operating rates still relatively elevated? Just trying to sort of make sense of this uneven sort of pricing environment by region.

Speaker #9: I mean, my understanding is that, you know, as I take a look at the raw material side of things, you know, just in the Middle East alone, there seems to be 26 to 27 million tons of methanol capacity, that is offline, right?

Speaker #9: And obviously, methanol pricing, across the globe, has risen quite rapidly, including China, right? so I'm just trying to understand this recent dip that we've seen, particularly in Chinese spot ACETIC pricing, you know, where are the margins there?

Hassan Ahmed: I'm just trying to understand this recent dip that we've seen, particularly in Chinese spot acetic pricing. You know, where are the margins there? Are operating rates still relatively elevated? Just trying to sort of make sense of this uneven sort of pricing environment by region.

Speaker #9: Are operating rates still relatively elevated? Just trying to sort of make sense of this uneven sort of pricing environment by region.

Speaker #2: Yeah. Hassan, I, I, I think you asked a good time to, to really call out the decisive actions that our team in, acetyls has taken around the world in the quarter.

Scott Richardson: Yeah, Hassan, I think now is a good time to really call out the decisive actions that our team in Acetyls has taken around the world in the quarter. They responded really quickly at the end of Q1 in order to take advantage of, you know, the margins started to move up there in China, in particular, and that's really the only place that we saw, you know, benefit from some of the supply chain disruption in Q1. They were really working to position for the second quarter. As we kind of look at it, you know, your margins were highest probably here in Q2 in China at the very beginning of the quarter, and they've come off.

Speaker #2: They responded really quickly at the end of Q1 in order to take advantage of—you know, the margins started to move up there in China, in particular.

Speaker #2: And that's really the only place, that we saw, you know, benefit from some of the supply chain disruption, in, in Q1. But they were really working to position for the second quarter.

Scott Richardson: They were really working to position for the second quarter. As we kind of look at it, you know, your margins were highest probably here in Q2 in China at the very beginning of the quarter, and they've come off.

Speaker #2: And, and as I as we kind of look at it, you know, your, your margins were, were highest probably here in, in Q2 in, in China.

Speaker #2: At the very beginning of the quarter, and they've come off. But we're certainly not at margin levels, where they were, at the beginning of 2026.

Scott Richardson: We're certainly not at margin levels, where they were at the beginning of 2026. You're kind of in between that, you know, where they were at the beginning of April and where they were when we started the year. It's, it's somewhere in that zone. You know, we did see, you know, China was in holiday last week, came back today. Pricing did move up a little bit, we're gonna have to kind of see how that holds and where demand is. Demand has held relatively steady from what we can tell, you know, through the value chain in China.

Speaker #2: So you're kind of in between that, you know, where they were at the beginning of April and where they were when we started, the year.

Speaker #2: And so it's, it's somewhere in that, that zone, you know, we did see, you know, China was in holiday, last week, came back, today.

Speaker #2: Pricing did move up a little bit, so we're going to have to kind of see how that holds and where demand is. But demand has held relatively steady, from what we can tell, through the value chain in China.

Scott Richardson: Pricing did move up a little bit, we're gonna have to kind of see how that holds and where demand is. Demand has held relatively steady from what we can tell, you know, through the value chain in China.

Hassan Ahmed: Very helpful, Scott. As a follow-up, can you just give us an update on where you guys stand with regards to any further potential divestitures?

Speaker #9: Very helpful, Scott. And as a follow-up, can you just give us an update on where you guys stand, with regards to any further potential divestitures?

Speaker #2: Yeah, Hassan. Yeah, we continue to work on that, you know, very aggressively. And I would say, you know, the current events haven't helped the M&A market.

Chuck Kyrish: Yeah, Hassan. Yeah, we continue to work that, you know, very aggressively. I would say, you know, the current events haven't helped the M&A market. Regardless, we do feel good about signing another deal this year. It could be a smaller deal, but we're working hard to get one signed. We have not baked in any assumption for cash proceeds from a deal, just from the uncertainty of, you know, signing versus closing.

Speaker #2: but regardless, we do feel good about signing another deal this year. it could be a smaller deal, but we're working hard to get get one signed.

Speaker #2: we have not baked in any assumption for cash proceeds from a deal, just from the uncertainty of, you know, kind of, signing versus closing.

Speaker #9: Very helpful. Thank you so much.

Hassan Ahmed: Very helpful. Thank you so much.

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

Operator 2: Thank you. Our next question is coming from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Operator: Thank you. Our next question is coming from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Speaker #10: Yes. Thank you and good morning. Scott, can you speak to your mix of contract versus spot business within acetyls, on a pre-war basis? And speak to how that is evolving, if it's changing at all, post-war?

Kevin McCarthy: Yes, thank you, and good morning. Scott, can you speak to your mix of contract versus spot business within Acetyls, on a pre-war basis, and speak to how that is evolving, if it's changing at all, post-war? You know, for example, you know, if you consider VAM and some of the parabolic price action there, is your philosophy to sort of strike while the iron is hot and take advantage of this windfall opportunity, you might say? Is it to really focus on upgrading your contracts and the terms and the mix, you know, with an eye toward the medium to longer term or some balance of those? Maybe you can just kind of talk through that and how you're thinking about it.

Speaker #10: You know, for example, you know, if you consider VAM and, some of the parabolic price action there, is your philosophy to sort of strike while the iron is hot and, and take advantage of, this, windfall opportunity you might say?

Speaker #10: Or, is it to, really focus on upgrading your, your contracts and the terms and the mix, you know, with an eye toward the medium to longer term?

Kevin McCarthy: Is it to really focus on upgrading your contracts and the terms and the mix, you know, with an eye toward the medium to longer term or some balance of those? Maybe you can just kind of talk through that and how you're thinking about it.

Speaker #10: Or, or some balance of those. Maybe you can just kind of talk through that and how you're thinking about it.

Speaker #2: Yeah. Let me let me just kind of step back a minute, Kevin. You know, our team is first focused on, on being the most reliable supplier in each region, in each product.

Scott Richardson: Let me just kind of step back a minute, Kevin. You know, our team is first focused on being the most reliable supplier in each region, in each product. You know, I think we've developed a network pretty deliberately for over many years that can achieve this and give us flex to be able to respond to what happens and what kind of landscape changes happen. You know, the pricing mechanisms that we have are different in each region, in each product, to be honest. You know, we've got, you know, some formula pricing in certain regions, particularly VAM in the United States that we've talked about. It kind of moves with raw materials, gives us a nice space, gives us cost pass-through.

Speaker #2: You know, and I think we developed a network, pretty deliberately, over many, many years, that can achieve this and give us flex to be able to respond to what happens and what kind of landscape changes happen.

Speaker #2: And so, you know, the pricing mechanisms that we have are different in each region, in each product, to be honest. you know, we've got, you know, some formula pricing in certain regions, particularly VAM in the in the United States that we've talked about, it kind of moves with raw materials, gives us a nice base, gives us cost pass-through.

Scott Richardson: You know, we've got, you know, some formula pricing in certain regions, particularly VAM in the United States that we've talked about. It kind of moves with raw materials, gives us a nice space, gives us cost pass-through.

Scott Richardson: We've got a lot more, you know, contracted business in Asia, but moves with how the market is moving, you know, very quickly. We've got blends in the, in the balance of the business in the US and in Europe on different mechanisms. This is about being ready in an environment like we are now. Being able to flex with some extra volume, you know, gives us that ability to, you know, be that reliable supplier for customers and for new customers that, you know, are just coming to Celanese or just coming back to Celanese. It is about how do we get that business secured, you know, longer term. We are securing business that we didn't have under agreement for the H2.

Speaker #2: we've got a lot more, you know, contracted business in Asia, but moves with how the market is moving. you know, very quickly. And then we've got blends in the in the balance of the business in the US and in Europe.

Speaker #2: on different mechanisms. And so, this is about being ready in an environment like we are now. And so being able to flex with some extra volume, you know, gives us that ability to, you know, be that reliable supplier for, for customers and for new customers that, you know, are just coming to sell in these or just coming back to sell in these.

Speaker #2: And, and so it is about how do we get that business secured, you know, longer term. And we are securing business that we didn't have under agreement for the second half.

Scott Richardson: It is about how do we get that business secured, you know, longer term. We are securing business that we didn't have under agreement for the H2. You know, as that process works here in Q2, you know, give us better clarity on what the Q3 and Q4 are gonna look like as we are able to utilize this flex capacity that we have.

Speaker #2: And so, you know, as that process works here in the second quarter, you know, it'll give us better clarity on what the third and fourth quarter are going to look like, as we are able to utilize this flex capacity that we have.

Scott Richardson: You know, as that process works here in Q2, you know, give us better clarity on what the Q3 and Q4 are gonna look like as we are able to utilize this flex capacity that we have.

Speaker #10: Okay, thank you for that. And then, secondly, I want to ask about your new strategic initiatives in nylon that you announced last night in the US and Singapore.

Kevin McCarthy: Okay. Thank you for that. Secondly, I want to ask about your new strategic initiatives in nylon that you announced last night in the US and Singapore. I think you're targeting incremental cost savings of $30 million. Maybe you can step through what you're doing there and comment on, you know, the cash cost to achieve those savings and the timing of the flow through of the $30 million in coming quarters or years.

Speaker #10: I think you're targeting incremental cost savings of 30 million dollars. So maybe you can step through what, what you're doing there and comment on, you know, the cash cost to achieve those savings and, you know, the timing of the flow-through of, of the 30 million and coming quarters or years.

Speaker #2: Yeah. I'll, I'll let me hit kind of the, the, the philosophy, and the strategy around the changes, Kevin, and then I'll turn it to Chuck to talk about some of the details.

Scott Richardson: Yeah. Let me hit kind of the, the philosophy and the strategy around the changes, Kevin, then I'll turn it to Chuck to talk about some of the details. You know, when it comes to Nylon 6,6, we've been very open about this now for, you know, more than a year. As we said in the past, you know, our value is in the compounding step of the process, and that's not changing here. In fact, we're enhancing, you know, our compounding capabilities in our specialty products where we need to to ensure the reliability of supply to our customers. You know, we've had a very thoughtful step plan to ensure, you know, the short and long-term sustainability, you know, of how we get polymer.

Speaker #2: you know, when it comes to nylon 6-6, we've been very open about this now for, you know, more than a year. and as we said in the past, you know, our value is in the compounding step of the process.

Speaker #2: And that's not changing here. And in fact, we're enhancing, you know, our compounding capabilities in our specialty products where we need to, to ensure the reliability, of supply to our customers.

Scott Richardson: In fact, we're enhancing, you know, our compounding capabilities in our specialty products where we need to to ensure the reliability of supply to our customers. You know, we've had a very thoughtful step plan to ensure, you know, the short and long-term sustainability, you know, of how we get polymer.

Speaker #2: And, you know, we've had a very thoughtful step plan to ensure, you know, the short and long-term sustainability, you know, of how we get polymer.

Speaker #2: And so, you know, being able to optimize this, you know, make versus buy, on polymer is critically important. And, and so these announcements around polymer capacity for us is really the next big wave of that commitment to improving, the fundamental profitability of the nylon 6-6 business.

Scott Richardson: You know, being able to optimize this, you know, make versus buy on polymer is critically important. These announcements around polymer capacity for us is really the next big wave of that commitment to improving the fundamental profitability of the Nylon 6,6 business, and we believe these are the right moves for us right now. You know, I think, you know, as we go forward, you know, we would expect about $30 million of savings. As you mentioned, about a third of that will probably hit here in H2 of the year. I'll turn it to Chuck to talk about the other details.

Speaker #2: And we believe these are the, the right moves for us right now. you know, I think, you know, as we go forward, you know, we would expect about 30 million dollars of savings, as you mentioned, about a third of that will probably hit here in the second half of the year.

Scott Richardson: You know, I think, you know, as we go forward, you know, we would expect about $30 million of savings. As you mentioned, about a third of that will probably hit here in H2 of the year. I'll turn it to Chuck to talk about the other details.

Speaker #2: and I'll turn it to Chuck to talk about, the other details.

Speaker #11: Yeah. And thanks. Thanks, Kevin. yeah. Yeah. Like Scott said, about a third of that 30 million starts rolling in this year. Your question on the cash costs, think about that as sort of less than a one-year payback of that of that 30 million.

Chuck Kyrish: Yeah. Thanks. Thanks, Kevin. Yeah, like Scott said, about a third of that $30 million starts rolling in this year. Your question on the cash costs, think about that as sort of less than a one-year payback of that $30 million. That's been in our free cash flow forecast this year, so nothing incremental there.

Speaker #11: That's been in our, free cash flow forecast, this year. So, so nothing incremental there.

Speaker #10: Thanks so much.

Kevin McCarthy: Thanks so much.

Speaker #12: Thank you. Our next question's come from the line of Lawrence Alexander with Jefferies. Please proceed with your questions.

Operator 2: Thank you. Our next question is coming from the line of Laurence Alexander with Jefferies. Please proceed with your questions.

Operator: Thank you. Our next question is coming from the line of Laurence Alexander with Jefferies. Please proceed with your questions.

Laurence Alexander: Good morning. Just wanted to flesh out how you're thinking on working capital, how much you think in your base case working capital will be a use of cash for this year. As you think about this year and next year, is working capital just ebbing and flowing with your expectations around input costs, or is there gonna be some net drag on EBITDA at some point to work down to reduce your working capital position?

Speaker #13: So good morning. Just wanted to flesh out how you're thinking on, working capital, how much you think, in, in your base case, working capital will be a use of cash for the this year.

Speaker #13: And as you think about this year and next year, is working capital just ebbing and flowing with your expectations around input costs, or is there going to be some net drag on EBITDA at some point to work that to reduce your working capital position?

Speaker #2: Yeah. Thanks, Lawrence. you know, let me talk about free cash flow this year and sort of, talk about working capital with, within that. You know, if you look at our midpoint of our earnings guide, that's a that's a about a few hundred million of, of EBITDA growth this year.

Chuck Kyrish: Yeah. Thanks, Laurence. You know, let me talk about free cash flow this year and sort of talk about working capital within that. You know, if you look at our midpoint of our earnings guide, that's about a few hundred million of EBITDA growth this year. That will translate into free cash flow, it is likely that it'll be split between 2026 and 2027 as it works its way through working capital. Right now, to simplify, we're assuming we collect about half of that increased EBITDA this year and half next year. That would mean about half of that gets, you know, tied up in working capital.

Speaker #2: that will translate into free cash flow, but it is likely that, it'll be split between 26 and 27. as it works its way through working capital.

Chuck Kyrish: Right now, to simplify, we're assuming we collect about half of that increased EBITDA this year and half next year. That would mean about half of that gets, you know, tied up in working capital.

Speaker #2: Right now, to simplify, we're assuming we collect about half of that increased EBITDA this year, and half next year. So that would mean about half of that gets, you know, tied up in working capital.

Speaker #2: I think before, before that, we were assuming, you know, this year actually that working capital would be a, a source of cash of, say, call it 100 million as we continue to reduce inventory in AM.

Chuck Kyrish: I think before that, we were assuming, you know, this year actually, that working capital would be a source of cash of, say, call it $100 million as we continue to reduce inventory in EM. Maybe working capital in this scenario is closer to flat for the year. I think you kind of ebb and flow with demand, but we do expect to continue to take inventory out of the system, you know, and generate, you know, tailwinds in working capital.

Speaker #2: So, so maybe working capital in this scenario is closer to flat. for the year. And then I think you, you kind of ebb and flow with demand, but we do expect to continue to take, inventory out of the system, you know, and, and generate, you know, tailwinds, in, in working capital.

Speaker #12: Thank you.

Laurence Alexander: Thank you.

Speaker #10: Thank you. Our next question's come from the line of John McNulty with BMO. Please proceed with your questions.

Operator 2: Thank you. Our next question has come from the line of John McNulty with BMO. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of John McNulty with BMO. Please proceed with your questions.

Speaker #11: Yeah, good morning. Thanks for taking my question. So on EM, with all of the work that you've been doing, and I guess some incremental work even this year, is there a way to think about—maybe this year is not necessarily a normal year, I guess?

John McNulty: Yeah. Good morning. Thanks for taking my question. On EM, with all of the work that you've been doing, and I guess some incremental work even this year, I guess, is there a way to think about maybe this year is not necessarily a normal year, I guess? Is there a way to think about what you think the mid-cycle earnings power of the business is now, just given, you know, given all the changes that you're completing and also maybe a more normalized demand environment?

Speaker #11: Is there a way to think about what you think the mid-cycle earnings power of the business is now, just given you know, given all the changes that you're that you're completing and, and also maybe a more normalized demand environment?

Speaker #2: Yeah. Thanks, John. you know, the words that we used in the prepared comments, I think, are, are important to think about here. It's, it's really about growth and fortify.

Scott Richardson: Yeah. Thanks, John. You know, the words that we used in the prepared comments, I think are important to think about here. It's really about growth and fortify. As we, as we think about the fortify piece, I mean, that's You know, we've been working that hard with the cost reduction actions that we've taken out, the efficiency that we've been able to drive, how we're adding technology to the business with our Chemille platform. We are strengthening this business and positioning it to be able to ready to respond to customer needs. The other thing that the team has been working really hard on is kind of building a really deep segment approach focused on where we can win and where we can hold that business.

Speaker #2: And as we as we think about the fortify piece, I mean, that's you know, we've been working that hard with the, the cost reduction actions that we've taken out, the efficiency, that we've been able to drive, how we're adding technology to the business with our Camille platform.

Speaker #2: There is we are strengthening, this business and positioning it, to be able to ready to respond to customer needs. The other thing that the team has been working really hard on is, is kind of building a, a really deep segment approach focused on where we can win and where we can hold that business.

Scott Richardson: We are strengthening this business and positioning it to be able to ready to respond to customer needs. The other thing that the team has been working really hard on is kind of building a really deep segment approach focused on where we can win and where we can hold that business.

Speaker #2: So where we have a differentiated offering, in growth subsegments and things like medical, electronics, data centers, some key growth industrial applications, high-performance—yeah, athletic wear.

Scott Richardson: Where we have a differentiated offering, in growth sub-segments, in things like medical, electronics, data centers, some key growth industrial applications, high performance, you know, athletic wear. There's just a lot of really great work the team's been doing in these high growth areas. Positioning well there, building the pipeline so that we can hit that growth piece going forward. Look, growth is always hard. Growth is even harder when the world around you isn't growing broadly. There are pockets of growth here, that's really where that focus is. It's hard to say, you know, what mid-cycle will look like. We do not believe we're anywhere near mid-cycle demand in kind of our historical key end uses, as well as, you know, some of these emerging growth areas.

Speaker #2: There's just a lot of really great work the team's been doing i-in these high-growth areas. And so positioning well there, building the pipeline so that we can hit that growth piece going forward.

Speaker #2: And, and look, growth is always hard. Growth is even harder, when the world around you i-isn't growing broadly. But there are pockets of growth here and, and that's really where, that focus is.

Scott Richardson: There are pockets of growth here, that's really where that focus is. It's hard to say, you know, what mid-cycle will look like. We do not believe we're anywhere near mid-cycle demand in kind of our historical key end uses, as well as, you know, some of these emerging growth areas. As we work that, as we continue to build out what we think the addressable market space is there, then we'll provide that color in the future.

Speaker #2: And so it's hard to say, you know, what mid-cycle will look like. We do not believe we're anywhere near mid-cycle demand in kind of our historical key end uses, as well as, you know, some of these emerging growth areas.

Speaker #2: So as we as we work that, as we continue to, to build out what we think the addressable market space is there, then we'll provide that color in the future.

Scott Richardson: As we work that, as we continue to build out what we think the addressable market space is there, then we'll provide that color in the future.

Speaker #11: Great. Thanks very much for the caller.

John McNulty: Great. Thank you very much for the color.

Speaker #12: Thank you. Our next question's come from the line of Matthew Diau with Bank of America. Please proceed with your questions.

Operator 2: Thank you. Our next question has come from the line of Matthew DeYoe with Bank of America. Please proceed with your questions.

Operator: Thank you. Our next question has come from the line of Matthew DeYoe with Bank of America. Please proceed with your questions.

Speaker #13: Good morning. To, to touch a little bit on this, right, you know, I, I think there's a, a desire amongst investors and really, you know, sell-side as well to just get a better handle on, like, what EM is now, given just the, the kind of, asset aggregation and then closures and re-polymerizations and closures.

Matthew DeYoe: Good morning. To touch a little bit on this, right, you know, I think there's a desire amongst investors really, you know, sell side as well, to just get a better handle on, like, what EM is now, given just the kind of asset aggregation and then closures and repolymerizations and closures. I get the core identity and thesis behind Fortify. Like, at the end of the day, what is an achievable, I don't know, I don't want to call it, like, mid-cycle because it's not necessarily a pure commodity business, but what should the people or what should the market think about as like a, you know, reasonable expectation on profitability for this business under normal demand, normal kind of market structure?

Speaker #13: I get the, the core identity and, and thesis behind fortify. But, like, at the end of the day, what is an achievable I don't know.

Matthew DeYoe: I get the core identity and thesis behind Fortify. Like, at the end of the day, what is an achievable, I don't know, I don't want to call it, like, mid-cycle because it's not necessarily a pure commodity business, but what should the people or what should the market think about as like a, you know, reasonable expectation on profitability for this business under normal demand, normal kind of market structure?

Speaker #13: I don't want to call it, like, mid-cycle because it's not necessarily a pure commodity business. But what should what should the people or what should the market think about as, like, a, you know, reasonable expectation on profitability for this business under normal demand?

Speaker #13: Normal kind of market, market structure?

Speaker #12: Yeah. Thanks, Matt. you know, there's a lot to unpack there. you know, what, what I would say is this is a business that is customer-focused, with an eye towards building unique solutions.

Scott Richardson: Thanks, Matthew. You know, there's a lot to unpack there. You know what I would say is this is a business that is customer-focused, with an eye towards building unique solutions. It's a business that we've been working hard over the last three and a half years, to make sure that we're well-positioned in the environment that we're now in globally, with a lot of the competitive landscape that's changed, to be able to win. It's a business that has unique capabilities, it has unique products, and it has a unique ability, to be able to get polymer solutions to do just about anything.

Speaker #12: And i-it's a business that we've been working hard over the last three and a half years to, to make sure that we're well-positioned in the environment that we're now in globally, with a lot of the competitive landscape that's changed, to be able to win.

Speaker #12: And it's a business that has unique capabilities. It has unique products, and it has a unique ability to be able to get polymer solutions to do just about anything.

Scott Richardson: It's a business that has unique capabilities, it has unique products, and it has a unique ability, to be able to get polymer solutions to do just about anything. We've got a great model that I think ensures that the things that we're working on are gonna drive the profitability and are worth the time and effort that it takes to work these, you know, solutions.

Speaker #12: And we've got a great model that I think ensures that the things that we're working on are going to drive the profitability on our worth, the time, and effort, that it takes to work these, you know, solutions.

Scott Richardson: We've got a great model that I think ensures that the things that we're working on are gonna drive the profitability and are worth the time and effort that it takes to work these, you know, solutions. I think what we've been able to do now is take a business that was performing, you know, on an EBITDA basis in the low teens now to one that's now consistently performing, you know, north of 20%. The idea is to keep moving that upward. Even if the world around us is not growing, we are focused on growth.

Speaker #12: And so it I think what we've been able to do now is take a business that was performing, you know, on an EBITDA basis in the in the low teens, now to one that's now consistently performing, you know, north of 20%, and the idea is to keep moving that upward.

Scott Richardson: I think what we've been able to do now is take a business that was performing, you know, on an EBITDA basis in the low teens now to one that's now consistently performing, you know, north of 20%. The idea is to keep moving that upward. Even if the world around us is not growing, we are focused on growth.

Speaker #12: Even if the world around us is not growing, we are focused on growth. And when you look at and, and kind of back into you know, our assumptions for this year, and you you normalize out Micromax in the 40 or so million dollars of EBITDA that comes out of that, you know, this is a business that's going to grow year over year, even though it's end markets are not growing.

Scott Richardson: When you look at and kind of back into, you know, our assumptions for this year, you normalize out Micromax and the $40 million or so of EBITDA that comes out of that, you know, this is a business that's gonna grow year-over-year, even though its end markets are not growing. I think that's the way to think about it. It's a business that should be able to grow like we did in the past, going back, you know, 5, 10 years ago, at 5% to 10% minimum on the EBITDA line, a business that's consistently gonna find a way to be able to deal with whatever the global environment is.

Speaker #12: And so I think that's the way to think about it. It's a business that should be able to grow like we did in the past, going back, you know, 5, 10 years ago, at 5 to 10 percent, minimum on the EBITDA line, and a business that's consistently going to find a way to, to be able to deal with whatever the, the global environment is.

Scott Richardson: I think that's the way to think about it. It's a business that should be able to grow like we did in the past, going back, you know, 5, 10 years ago, at 5% to 10% minimum on the EBITDA line, a business that's consistently gonna find a way to be able to deal with whatever the global environment is.

Speaker #12: And if we see a normalization of demand back to mid-cycle, and, and it's hard to say what that looks like because the world's changed quite a bit, you know, then I think you also possibly get kind of a hockey stick lift on that at some point.

Scott Richardson: If we see a normalization of demand back to mid-cycle, and it's hard to say what that looks like 'cause the world's changed quite a bit, you know, then I think you also possibly get kind of a hockey stick lift on that at some point. It's about being consistent, it's about being ready, and it's about continuing to take the hard steps to ensure that we have the cost structure in place to be able to win in a very competitive landscape.

Speaker #12: So it's about being consistent. It's about being ready. And it's about continuing to take the hard steps to ensure that we have the cost structure in place to be able to win in a very competitive landscape.

Speaker #13: All right. Thank you for that. And if I could just ask on the acetic side, right, like, I've never really trusted some of the consultants when it came to US acetic prices.

Matthew DeYoe: All right. Thank you for that. If I could just ask on the acetic acid side, right? Like, I've never really trusted some of the consultants when it came to US acetic acid prices. To your point, you know, Asia's off-peak, that would lead me to believe, like absent another leg higher, it remains maybe a bit curiously below Western markets. Well, first off, is that right? You know, again, I don't have confidence in the US pricing I get. How does this sustain? How does weaker acetic acid pricing not translate to weaker VAM? Or would that weaker acetic acid back up into methanol? Like how possible is this just stays kind of relegated to one market? I would assume it's not, you know, just wanna hear you opine on it.

Speaker #13: But to your point, you know, Asia's off-peak. and that would lead me to believe, like, absent another leg higher, it remains maybe a bit curiously below Western markets.

Speaker #13: So how does that sustain well, first off, is that right? Because, you know, again, I don't have confidence in the US pricing, I get.

Matthew DeYoe: Well, first off, is that right? You know, again, I don't have confidence in the US pricing I get. How does this sustain? How does weaker acetic acid pricing not translate to weaker VAM? Or would that weaker acetic acid back up into methanol? Like how possible is this just stays kind of relegated to one market? I would assume it's not, you know, just wanna hear you opine on it.

Speaker #13: But how does this sustain? And then how does weaker acid pricing not translate to weaker VAM or, or would that weaker acid back up into methanol?

Speaker #13: Like, how, how possible is this just stays kind of relegated to one market? I would assume it's not, but, you know, I don't just want to hear you opine on it.

Speaker #12: Yeah. Matt, as you know, I'm old. and I've been here at Celanese for 21 years.

Scott Richardson: Yeah. Matthew, as you know, I'm old. I've been here at Celanese for 21 years.

Speaker #13: I'm not that old.

Matthew DeYoe: Not that old.

Scott Richardson: When I joined Celanese, your, what we now call Acetyl Chain business was an acetic acid business. Now it is an Acetyl Chain business. It's a business that doesn't rely on us just selling acetic acid in order to be successful. You know, back then, 20 years ago, over half of what we sold to an end customer.

Speaker #12: And when I joined Celanese, what we now call the acetyl chain business was an acetic acid business. And now it is an acetyl chain business.

Speaker #12: and it's a business that doesn't rely on us just selling, acetic acid in order to be successful. And, you know, back then, 20 years ago, over half of what we sold to an end customer in this business was acetic acid.

Matthew DeYoe: Right

Scott Richardson: in this business was acetic acid. That is very much not the case anymore. You know, some of the dynamics that you talk about, you know, we are very much less susceptible to those acetic acid movements. Yes, you are gonna see, you know, acetic acid pricing in some regions, you know, roll through into the downstream, but it usually takes some time, both on the way up and on the way down. So, you know, it's about managing that, and it's also then continuing to position for the pockets of growth that are in this business. Yes, they've been small, but there have been pockets of growth for us in the vinyl emulsions part of the business, as well as in redispersible polymer powders.

Speaker #12: That is very much not the case anymore. And so, you know, some of the dynamics that you talk about, you know, we are very much less susceptible to those acetic acid movements.

Speaker #12: And yes, you are going to see, you know, acetic acid pricing in some regions, you know, roll through, into the downstream. But it usually takes some time, both on the way up and on the way down.

Speaker #12: And so you know, it's about managing that. And it's also then continuing to position for the pockets of growth that are in this business.

Scott Richardson: So, you know, it's about managing that, and it's also then continuing to position for the pockets of growth that are in this business. Yes, they've been small, but there have been pockets of growth for us in the vinyl emulsions part of the business, as well as in redispersible polymer powders.

Speaker #12: And, and yes, they've been small. but there have been pockets of growth for us in the vinyl emulsions part of the business as well as in redispersible powders.

Scott Richardson: In the environment we're in now, you know, we're finding ways at which to expand that. As I mentioned earlier, with some of the switching that customers wanna do away from oil-based systems, you know, this is giving us a nice advantage, the opportunity is now for us to go get that business, get it contracted, and extend it into next year and into and beyond.

Speaker #12: and in the environment we're in now, you know, we're, we're finding ways at which to expand that. As I mentioned earlier with some of the, the switching that customers want to do, away from oil-based systems, you know, this is giving us a nice advantage.

Speaker #12: And the, the, the opportunity is now for us to go get that business, get it contracted, and extend it into next year and into and beyond.

Speaker #13: All right. Thanks, Scott.

Matthew DeYoe: Thanks, Scott.

Speaker #12: Thank you. Our next question is coming from the line of John Roberts with Mizuho. Please proceed with your questions.

Operator 2: Thank you. Our next question has come from the line of John Roberts with Mizuho.

Operator: Thank you. Our next question has come from the line of John Roberts with Mizuho.

Edwin Rodriguez: Thank you. This is Edwin Rodriguez for John. Good morning, everyone. A quick one, Scott. In this inflationary environment, like, how concerned are you about demand disruption in the later parts of the year? Related to that, are you seeing any signs of pre-buying by customers, like, trying to get ahead of price increases that they're seeing coming?

Edlain Rodriguez: Thank you. This is Edwin Rodriguez for John. Good morning, everyone. A quick one, Scott. In this inflationary environment, like, how concerned are you about demand disruption in the later parts of the year? Related to that, are you seeing any signs of pre-buying by customers, like, trying to get ahead of price increases that they're seeing coming?

Speaker #13: thank you. this is Edwin Rodriguez for John. Good morning, everyone. My quick one, Scott. So in this inflationary environment, like, how concerned are you about demand dysfunction in the latter parts of the year?

Speaker #13: And related to that, are you seeing any signs of pre-buying by customers that are trying to get ahead of price increases that they're, they're seeing coming?

Speaker #12: Yeah. Thanks for the question. Yeah. Look, it's something that we're very much, concerned about. And we're watching very closely. And, you know, it's, factors into, you know, the scenarios that we put out for, the second half, and, and there's no doubt that's something that we are looking at.

Scott Richardson: Yeah. Thanks for the question. Yeah, look, it's something that we're very much concerned about, and we're watching very closely. You know, it's factors into, you know, the scenarios that we put out for H2. There's no doubt that's something that we are looking at, and we put it in our prepared comments that, you know, particularly in Engineered Materials that, you know, we may be seeing a front-loading of some of that volume. That certainly factors into the guide that we made for H2. I don't think we're seeing much of that in Acetyls, to be honest with you. I mean, the products that we have there largely are liquid bulk chemicals, and they have, you know, some element of shelf life as well as storage limitations around the world.

Speaker #12: And we put it in our prepared comments that, you know, particularly in engineered materials, that, you know, we may be seeing a front-loading of some of that volume.

Speaker #12: And so that certainly factors into the guide that we made, for the second half. I don't think we're seeing much of that, in, in acetyls, to be honest with you.

Scott Richardson: I don't think we're seeing much of that in Acetyls, to be honest with you. I mean, the products that we have there largely are liquid bulk chemicals, and they have, you know, some element of shelf life as well as storage limitations around the world. I don't think it's much of a factor there, but it's certainly something that we're cognizant of on the Engineered Materials side of the house.

Speaker #12: I mean, the products that we have there, largely are liquid bulk chemicals, and they have, you know, some element of shelf life as well as storage limitations around the world.

Speaker #12: So I don't think it's much of a factor there. but it's certainly something that we're cognizant of on the engineered materials side of the house.

Scott Richardson: I don't think it's much of a factor there, but it's certainly something that we're cognizant of on the Engineered Materials side of the house.

Speaker #13: Okay. Perfect. That's all I have. Thank you.

Edwin Rodriguez: Okay. Perfect. That's all I have. Thank you.

Edlain Rodriguez: Okay. Perfect. That's all I have. Thank you.

Scott Richardson: Daryl, we'll make the next question our last one, please.

Speaker #12: Carol, we'll make the next question our last one, please.

Speaker #13: Thank you. Our final questions will come from the line of Josh Spector with UBS. Please proceed with your questions.

Operator 2: Thank you. Our final questions will come from the line of Joshua Spector with UBS. Please proceed with your questions.

Operator: Thank you. Our final questions will come from the line of Joshua Spector with UBS. Please proceed with your questions.

Speaker #14: Hi. Good morning. It's Chris Perella on for Josh. can you size the, the palm, turnaround impact in the second quarter there? I might have missed that earlier.

Chris Perrella: Hi. Good morning. It's Chris Perrella on for Josh. Can you size the POM turnaround impact in Q2 there? Might have missed that earlier. Is the later restart dependent on the ability to get feed out of Ibn Sina, or can you make the economics work buying methanol to feed the plant there? I guess the corollary is, are you seeing raw material sourcing issues, particularly in Asia at this point?

Speaker #14: And is the later restart dependent on the ability to get feed out of even Cena or, or can you make the, the economics work buying methanol to feed the plant there?

Speaker #14: And, and I guess the corollary is, are, are you seeing raw material sourcing issues, particularly in Asia at this point?

Speaker #12: Yeah. Chris, let me start. And I'll let Chuck fill in the details. Let me hit the second part of your question first. no. We are we have already moved.

Scott Richardson: Yeah. Chris, let me start, and I'll let Chuck fill in the details. Let me hit the second part of your question first. No, we have already moved, and we are moving methanol from our plant in the United States over to Europe. You know, our POM unit in Europe, you know, either uses sourced methanol from the market or uses our own cost-based US natural gas-based material.

Speaker #12: And we are moving methanol, from our plant in the United States over, to Europe. So, you know, our palm unit in Europe, you know, either uses sourced methanol, from the market or uses our own cost-based, US natural gas-based material.

Speaker #14: Yeah, and let me talk about—or kind of walk from Q1 to Q2—about the turnaround and some of the other inventory. So, in Q1, we built palm inventory, hit the income statement, $25 million benefit in Q1.

Chuck Kyrish: Yeah. Let me, let me talk about, kind of walk Q1 to Q2, both the turnaround and some of the other inventory. In Q1, we built POM inventory, hit the income statement, $25 million benefit in Q1. Now in Q2, we're gonna draw that POM inventory down, but we will build some nylon for the transitions that we've talked about. Expect a net, you know, $10 million absorption hit to the income statement in Q2, plus about $15 million of turnaround expense. As you know from the guide, we do expect to offset the majority of that $50 million sequential headwind, you know, through the volume improvement and pricing actions we've talked about.

Speaker #14: Now, in Q2, we're going to draw that palm inventory down. But we will build some nylon for the transitions that we've talked about. expect a net, you know, $10 million absorption hit to the income statement in Q2, plus about $15 million of turnaround expense.

Chuck Kyrish: Expect a net, you know, $10 million absorption hit to the income statement in Q2, plus about $15 million of turnaround expense. As you know from the guide, we do expect to offset the majority of that $50 million sequential headwind, you know, through the volume improvement and pricing actions we've talked about.

Speaker #14: As you know, from the guide, we do expect offset the majority of that $50 million sequential headwind, you know, through the volume improvement and pricing actions we've talked about.

Chris Perrella: Perfect. Thank you.

Speaker #14: Perfect. Thank you.

Speaker #12: Well, thank you, everyone. we, we like to thank you for, listening in today. And as always, we're available after the call for any follow-up questions.

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

Speaker #12: Daryl, please go ahead and close out the call.

Speaker #13: Ladies and gentlemen, thank you so much for your participation. This does conclude today's teleconference and webcast. Please disconnect your lines at this time. And have a wonderful day.

Operator 2: Ladies and gentlemen, thank you so much for your participation. This does conclude today's teleconference and webcast. Please disconnect your lines at this time, and have a wonderful day.

Operator: Ladies and gentlemen, thank you so much for your participation. This does conclude today's teleconference and webcast. Please disconnect your lines at this time, and have a wonderful day.