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Celanese Corporation Reports Second Quarter Earnings; Increases 2017 Outlook

July 24, 2017 4:15 PM

DALLAS--(BUSINESS WIRE)-- Celanese Corporation (NYSE: CE), a global technology and specialty materials company, today reported second quarter 2017 GAAP diluted earnings per share of $1.72 and adjusted earnings per share of $1.79, each a second quarter record. The Acetyl Chain and the Materials Solutions cores both contributed to the strong performance in the quarter. Advanced Engineered Materials grew project commercializations from translation of customer needs into value-add solutions and success with the ongoing integration of SO.F.TER. and Nilit. The Acetyl Chain grew profitability, overcoming the impact of a major site-wide turnaround. In the quarter, the company executed an agreement with Blackstone to form a new global company combining Celanese's cellulose derivatives and Blackstone's recently acquired Rhodia Acetow businesses. This will bring together two complementary cellulose acetate businesses that will better service global customers and advance technology to support existing and future markets.

Second Quarter 2017 Financial Highlights:

Three Months Ended
June 30,
2017 2016
(unaudited)
(In $ millions)
Operating Profit (Loss)
Advanced Engineered Materials 97 82
Consumer Specialties 49 80
Total Materials Solutions 146 162
Industrial Specialties 26 29
Acetyl Intermediates 109 77
Eliminations — 1
Total Acetyl Chain 135 107
Other Activities (41 ) (26 )
Total 240 243
Three Months Ended
June 30,
2017 2016
(unaudited)
(In $ millions, except per share data)
Net Earnings (Loss) 233 223
Adjusted EBIT(1)(2)
Advanced Engineered Materials 142 111
Consumer Specialties 79 108
Total Materials Solutions 221 219
Industrial Specialties 26 30
Acetyl Intermediates 106 80
Eliminations — 1
Total Acetyl Chain 132 111
Other Activities (27 ) (18 )
Total 326 312
Equity Earnings, Cost-Dividend Income, Other Income (Expense)
Advanced Engineered Materials 38 27
Consumer Specialties 28 28
Total Materials Solutions 66 55
Operating EBITDA(1) 401 385
Diluted EPS - continuing operations $ 1.72 $ 1.50
Diluted EPS - total $ 1.66 $ 1.50
Adjusted EPS(1) $ 1.79 $ 1.59
Net cash provided by (used in) investing activities (325 ) (63 )
Net cash provided by (used in) financing activities 21 (259 )
Net cash provided by (used in) operating activities 298 349
Free cash flow(1) 240 285
______________________________

(1)

See "Non-US GAAP Financial Measures" below.

(2)

The Company's discussion of adjusted earnings includes use of terms such as "segment income" and "core income". Those non-GAAP terms are defined below and reconciled in our Non-US GAAP Financial Measures and Supplemental Information document referenced below.

Second Quarter 2017 Highlights:

Second Quarter 2017 Business Segment Overview

Materials Solutions

Materials Solutions reported record net sales of $709 million in the second quarter, an 18 percent improvement over the prior year with Advanced Engineered Materials more than offsetting the decline in Consumer Specialties. Advanced Engineered Materials generated record second quarter GAAP operating profit of $97 million and record second quarter segment income of $142 million. An all time high of 547 projects were commercialized in the quarter driven by the organic opportunity pipeline and the recent SO.F.TER. and Nilit acquisitions. The successful integration of these acquisitions is a key element of AEM's growth strategy. While immediately accretive to segment income, these acquisitions are margin dilutive until synergies and product value upgrades are realized. Volume increased over second quarter of 2016 driven by the acquisitions, growth in Asia, and success of the project pipeline.

Acetate tow volume and price declined year over year driven by lower industry capacity utilization rates and outpaced productivity gains in the quarter. Sequentially, tow volume and price declined mainly because the first quarter of 2017 had some unique carryovers from 2016 contracts.

Affiliate earnings increased 20 percent year over year to $66 million primarily driven by Ibn Sina which had a turnaround in the second quarter of 2016 that did not occur in 2017.

Acetyl Chain

The Acetyl Chain grew second quarter GAAP operating profit by 26 percent year over year to $135 million and grew core income by 19 percent year over year to $132 million. During the planned turnaround in Clear Lake, Texas, the business leveraged its global production and supply chain capabilities and established product swaps to ensure reliability of supply to key customers, overcoming industry supply constraints and Celanese's limitations at Clear Lake. Pricing expanded in excess of higher raw material costs across products and more than offset higher turnaround expenses. GAAP operating margin of 16.3 percent and segment income margin of 16.0 percent were second quarter records. The chain's ability to respond quickly to global trade flow changes, even with the flagship acetyl plant in a major turnaround, demonstrates the versatility of the acetyls business at Celanese.

Cash Flow

The Company recorded operating cash flow of $298 million and free cash flow of $240 million. Capital expenditures were $54 million in the quarter. In the second quarter, a total of $237 million cash was returned to shareholders, via $172 million in share buy-backs and $65 million in dividends. The Company targets at least $500 million in share repurchases in 2017.

Outlook

"The focus on value delivery at Celanese and growth driven business models enabled the strong performance in the second quarter. Advanced Engineered Materials is expected to generate outsized earnings growth propelled by a vibrant project pipeline and early success from integrating SO.F.TER. and Nilit. The Acetyl Chain is poised to drive earnings growth in the second half of 2017 by leveraging raw material volatility and higher volumes as Clear Lake returns to pre-turnaround capacity. Productivity savings of approximately $100 million are on target for the year, supported by initiatives across the company. Building on our success in the second quarter, we are increasing our expectations for growth in adjusted earnings per share to 9-11 percent for 2017," said Rohr.

We are unable to reconcile forecasted adjusted earnings per share growth to US GAAP diluted earnings per share without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, is not practical.

The Company's earnings presentation and prepared remarks related to the second quarter results will be posted on its website at www.celanese.com under Investor Relations/Events and Presentations after market close on July 24, 2017. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on the website and available at the link below. See "Non-GAAP Financial Measures" below.

Celanese Corporation is a global technology leader in the production of differentiated chemistry solutions and specialty materials used in most major industries and consumer applications. Our two complementary business cores, Acetyl Chain and Materials Solutions, use the full breadth of Celanese's global chemistry, technology and business expertise to create value for our customers and the corporation. As we partner with our customers to solve their most critical business needs, we strive to make a positive impact on our communities and the world through The Celanese Foundation. Based in Dallas, Celanese employs approximately 7,500 employees worldwide and had 2016 net sales of $5.4 billion. For more information about Celanese Corporation and its product offerings, visit www.celanese.com or our blog at www.celaneseblog.com.

Forward-Looking Statements

This release may contain "forward-looking statements," which include information concerning the Company's plans, objectives, goals, strategies, future revenues, synergies, performance, capital expenditures, financing needs and other information that is not historical information. All forward-looking statements are based upon current expectations and beliefs and various assumptions, including the announced joint venture transaction. There can be no assurance that the Company will realize these expectations or that these beliefs will prove correct. There are a number of risks and uncertainties that could cause actual results to differ materially from the results expressed or implied in the forward-looking statements contained in this release, including with respect to the joint venture. These risks and uncertainties include, among other things: changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate; the length and depth of product and industry business cycles, particularly in the automotive, electrical, textiles, electronics and construction industries; changes in the price and availability of raw materials, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources; the ability to pass increases in raw material prices on to customers or otherwise improve margins through price increases; the ability to maintain plant utilization rates and to implement planned capacity additions and expansions; the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants; the ability to identify desirable potential acquisition targets and to consummate acquisition or investment transactions consistent with the Company's strategy; increased price competition and the introduction of competing products by other companies; market acceptance of our technology; the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to the Company; changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property; compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, cyber security incidents, terrorism or political unrest or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war or terrorist incidents or as a result of weather or natural disasters; potential liability for remedial actions and increased costs under existing or future environmental regulations, including those relating to climate change; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies of governments or other governmental activities in the countries in which we operate; changes in currency exchange rates and interest rates; our level of indebtedness, which could diminish our ability to raise additional capital to fund operations or limit our ability to react to changes in the economy or the chemicals industry; and various other factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

Non-GAAP Financial Measures

Presentation

This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and the Consumer Specialties segment.

Use of Non-US GAAP Financial Information

This release uses the following Non-US GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, adjusted earnings per share and free cash flow. These measures are not recognized in accordance with US GAAP and should not be viewed as an alternative to US GAAP measures of performance or liquidity. The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin is operating margin; for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; and for free cash flow is net cash provided by (used in) operations.

Definitions of Non-US GAAP Financial Measures

Reconciliation of Non-US GAAP Financial Measures

Reconciliations of the Non-US GAAP financial measures used in this press release to the comparable US GAAP financial measure, together with information about the purposes and uses of Non-US GAAP financial measures, are included in our Non-US GAAP Financial Measures and Supplemental Information document filed as an exhibit to our Current Report on Form 8-K filed with the SEC on or about July 24, 2017 and also available on our website at www.celanese.com under Financial Information, Non-GAAP Financial Measures, or at this link: http://investors.celanese.com/interactive/lookandfeel/4103411/Non-GAAP.PDF.

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Supplemental Information

Additional information about our prior period performance is included in our Quarterly Reports on Form 10-Q and in our Non-US GAAP Financial Measures and Supplemental Information document.

Consolidated Statements of Operations - Unaudited

Three Months Ended
June 30,
2017 2016

(In $ millions, except share and pershare data)

Net sales 1,510 1,351
Cost of sales (1,143 ) (1,013 )
Gross profit 367 338
Selling, general and administrative expenses (96 ) (71 )
Amortization of intangible assets (5 ) (2 )
Research and development expenses (17 ) (19 )
Other (charges) gains, net (3 ) (4 )
Foreign exchange gain (loss), net (4 ) (1 )
Gain (loss) on disposition of businesses and asset, net (2 ) 2
Operating profit (loss) 240 243
Equity in net earnings (loss) of affiliates 38 35
Interest expense (30 ) (30 )
Refinancing expense — —
Interest income 1 —
Dividend income - cost investments 29 29
Other income (expense), net 3 (2 )
Earnings (loss) from continuing operations before tax 281 275
Income tax (provision) benefit (40 ) (52 )
Earnings (loss) from continuing operations 241 223
Earnings (loss) from operation of discontinued operations (9 ) —
Income tax (provision) benefit from discontinued operations 1 —
Earnings (loss) from discontinued operations (8 ) —
Net earnings (loss) 233 223
Net (earnings) loss attributable to noncontrolling interests (2 ) (2 )
Net earnings (loss) attributable to Celanese Corporation 231 221
Amounts attributable to Celanese Corporation
Earnings (loss) from continuing operations 239 221
Earnings (loss) from discontinued operations (8 ) —
Net earnings (loss) 231 221
Earnings (loss) per common share - basic
Continuing operations 1.73 1.51
Discontinued operations (0.06 ) —
Net earnings (loss) - basic 1.67 1.51
Earnings (loss) per common share - diluted
Continuing operations 1.72 1.50
Discontinued operations (0.06 ) —
Net earnings (loss) - diluted 1.66 1.50
Weighted average shares (in millions)
Basic 138.6 146.5
Diluted 139.0 147.1

Consolidated Balance Sheets - Unaudited

As of As of
June 30, December 31,
2017 2016
(In $ millions)
ASSETS
Current Assets
Cash and cash equivalents 511 638
Trade receivables - third party and affiliates, net 985 801
Non-trade receivables, net 227 223
Inventories 771 720
Marketable securities, at fair value 30 30
Other assets 59 60
Total current assets 2,583 2,472
Investments in affiliates 885 852
Property, plant and equipment, net 3,663 3,577
Deferred income taxes 164 159
Other assets 311 307
Goodwill 975 796
Intangible assets, net 302 194
Total assets 8,883 8,357
LIABILITIES AND EQUITY
Current Liabilities
Short-term borrowings and current installments of long-term debt - third party and affiliates 384 118
Trade payables - third party and affiliates 666 625
Other liabilities 332 322
Income taxes payable 42 12
Total current liabilities 1,424 1,077
Long-term debt, net of unamortized deferred financing costs 2,931 2,890
Deferred income taxes 165 130
Uncertain tax positions 150 131
Benefit obligations 866 893
Other liabilities 225 215
Commitments and Contingencies
Stockholders' Equity
Preferred stock — —
Common stock — —
Treasury stock, at cost (1,834 ) (1,531 )
Additional paid-in capital 158 157
Retained earnings 4,617 4,320
Accumulated other comprehensive income (loss), net (247 ) (358 )
Total Celanese Corporation stockholders' equity 2,694 2,588
Noncontrolling interests 428 433
Total equity 3,122 3,021
Total liabilities and equity 8,883 8,357

Non-US GAAP Financial Measures and Supplemental Information

July 24, 2017

In this document, the terms the "Company," "we" and "our" refer to Celanese Corporation and its subsidiaries on a consolidated basis.

Purpose

The purpose of this document is to provide information of interest to investors, analysts and other parties including supplemental financial information and reconciliations and other information concerning our use of non-US GAAP financial measures. This document is updated quarterly.

Presentation

This document presents the Company's business segments in two subtotals, reflecting our two cores, the Acetyl Chain and Materials Solutions, based on similarities among customers, business models and technical processes. As described in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q, the Acetyl Chain includes the Company's Acetyl Intermediates segment and the Industrial Specialties segment. Materials Solutions includes the Company's Advanced Engineered Materials segment and the Consumer Specialties segment.

Use of Non-US GAAP Financial Measures

From time to time, management may publicly disclose certain numerical "non-GAAP financial measures" in the course of our earnings releases, financial presentations, earnings conference calls, investor and analyst meetings and otherwise. For these purposes, the Securities and Exchange Commission ("SEC") defines a "non-GAAP financial measure" as a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that effectively exclude amounts, included in the most directly comparable measure calculated and presented in accordance with US GAAP, and vice versa for measures that include amounts, or are subject to adjustments that effectively include amounts, that are excluded from the most directly comparable US GAAP measure so calculated and presented. For these purposes, "GAAP" refers to generally accepted accounting principles in the United States.

Non-GAAP financial measures disclosed by management are provided as additional information to investors, analysts and other parties because the Company believes them to be important supplemental measures for assessing our financial and operating results and as a means to evaluate our financial condition and period-to-period comparisons. These non-GAAP financial measures should be viewed as supplemental to, and should not be considered in isolation or as alternatives to, net earnings (loss), operating profit (loss), operating margin, cash flow from operating activities (together with cash flow from investing and financing activities), earnings per share or any other US GAAP financial measure. These non-GAAP financial measures should be considered within the context of our complete audited and unaudited financial results for the given period, which are available on the Investor Relations/Financial Information/SEC Filings page of our website, www.celanese.com. The definition and method of calculation of the non-GAAP financial measures used herein may be different from other companies' methods for calculating measures with the same or similar titles. Investors, analysts and other parties should understand how another company calculates such non-GAAP financial measures before comparing the other company's non-GAAP financial measures to any of our own. These non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive or projections of future results.

Pursuant to the requirements of SEC Regulation G, whenever we refer to a non-GAAP financial measure, we will also present in this document, in the presentation itself or on a Form 8-K in connection with the presentation on the Investor Relations/Financial Information/Non-GAAP Financial Measures page of our website, www.celanese.com, to the extent practicable, the most directly comparable financial measure calculated and presented in accordance with GAAP, along with a reconciliation of the differences between the non-GAAP financial measure we reference and such comparable GAAP financial measure.

This document includes definitions and reconciliations of non-GAAP financial measures used from time to time by the Company.

Specific Measures Used

This document provides information about the following non-GAAP measures: adjusted EBIT, adjusted EBIT margin, operating EBITDA, operating EBITDA margin, operating profit (loss) attributable to Celanese Corporation, adjusted earnings per share, net debt, free cash flow and return on invested capital (adjusted). The most directly comparable financial measure presented in accordance with US GAAP in our consolidated financial statements for adjusted EBIT and operating EBITDA is net earnings (loss) attributable to Celanese Corporation; for adjusted EBIT margin and operating EBITDA margin is operating margin; for operating profit (loss) attributable to Celanese Corporation is operating profit (loss); for adjusted earnings per share is earnings (loss) from continuing operations attributable to Celanese Corporation per common share-diluted; for net debt is total debt; for free cash flow is net cash provided by (used in) operations; and for return on invested capital (adjusted) is net earnings (loss) attributable to Celanese Corporation divided by the sum of the average of beginning and end of the year short- and long-term debt and Celanese Corporation stockholders' equity.

Definitions

Supplemental Information

Supplemental Information we believe to be of interest to investors, analysts and other parties includes the following:

Results Unaudited

The results in this document, together with the adjustments made to present the results on a comparable basis, have not been audited and are based on internal financial data furnished to management. Quarterly results should not be taken as an indication of the results of operations to be reported for any subsequent period or for the full fiscal year.

Table 1

Adjusted EBIT and Operating EBITDA - Reconciliation of Non-GAAP Measures - Unaudited

Q2 '17

Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Net earnings (loss) attributable to Celanese Corporation 231 183 900 160 262 221 257
(Earnings) loss from discontinued operations 8 — 2 — 3 — (1 )
Interest income (1 ) — (2 ) (1 ) — — (1 )
Interest expense 30 29 120 29 28 30 33
Refinancing expense — — 6 — 4 — 2
Income tax provision (benefit) 40 56 122 (5 ) 15 52 60

Certain Items attributable to Celanese Corporation (Table 8)

18 65 130 106 7 9 8
Adjusted EBIT 326 333 1,278 289 319 312 358
Depreciation and amortization expense(1) 75 71 288 71 71 73 73
Operating EBITDA 401 404 1,566 360 390 385 431
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Advanced Engineered Materials — — — — — — —
Consumer Specialties — — 1 — 1 — —
Industrial Specialties — — — — — — —
Acetyl Intermediates — — — — — — —
Other Activities(2) — — 1 1 — — —
Accelerated depreciation and amortization expense — — 2 1 1 — —
Depreciation and amortization expense(1) 75 71 288 71 71 73 73
Total depreciation and amortization expense 75 71 290 72 72 73 73
______________________________

(1)

Excludes accelerated depreciation and amortization expense as detailed in the table above, which amounts are included in Certain Items above.

(2)

Other Activities includes corporate Selling, general and administrative ("SG&A") expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited

Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions, except percentages)
Operating Profit (Loss) / Operating Margin
Materials Solutions 146 20.6 % 166 23.5 % 652 27.5 % 163 27.7 % 161 27.3 % 162 27.0 % 166 27.9 %
Acetyl Chain(1) 135 16.3 % 52 6.5 % 446 14.2 % 86 11.5 % 108 14.2 % 107 13.7 % 145 17.3 %

Other Activities(2)

(41 ) (26 ) (205 ) (132 ) (23 ) (26 ) (24 )
Total 240 15.9 % 192 13.1 % 893 16.6 % 117 8.9 % 246 18.6 % 243 18.0 % 287 20.4 %
Less: Net Earnings (Loss) Attributable to NCI(1) 2 1 6 1 1 2 2
Operating Profit (Loss) Attributable to Celanese Corporation 238 15.8 % 191 13.0 % 887 16.5 % 116 8.8 % 245 18.5 % 241 17.8 % 285 20.3 %
Operating Profit (Loss) / Operating Margin Attributable to Celanese Corporation
Advanced Engineered Materials 97 18.8 % 98 20.1 % 350 24.2 % 87 23.9 % 93 25.5 % 82 22.5 % 88 25.1 %
Consumer Specialties 49 25.4 % 68 31.2 % 302 32.5 % 76 33.8 % 68 30.2 % 80 34.0 % 78 32.0 %
Total Materials Solutions 146 20.6 % 166 23.5 % 652 27.5 % 163 27.7 % 161 27.3 % 162 27.0 % 166 27.9 %
Industrial Specialties 26 9.9 % 25 10.2 % 105 10.7 % 20 9.1 % 25 10.2 % 29 11.1 % 31 12.3 %
Acetyl Intermediates(1) 107 16.5 % 26 4.2 % 334 13.7 % 65 10.9 % 82 13.9 % 75 12.7 % 112 16.9 %
Eliminations — — 1 — — 1 —
Total Acetyl Chain 133 16.1 % 51 6.4 % 440 14.0 % 85 11.3 % 107 14.0 % 105 13.5 % 143 17.0 %
Other Activities(2) (41 ) (26 ) (205 ) (132 ) (23 ) (26 ) (24 )
Total 238 15.8 % 191 13.0 % 887 16.5 % 116 8.8 % 245 18.5 % 241 17.8 % 285 20.3 %
Equity Earnings, Cost-Dividend Income, Other Income (Expense) Attributable to Celanese Corporation
Advanced Engineered Materials 38 42 122 31 33 27 31
Consumer Specialties 28 30 110 27 27 28 28
Total Materials Solutions 66 72 232 58 60 55 59
Industrial Specialties — — — — — — —
Acetyl Intermediates 2 1 7 2 1 2 2
Total Acetyl Chain 2 1 7 2 1 2 2
Other Activities(2) 2 4 22 7 6 5 4
Total 70 77 261 67 67 62 65

Certain Items Attributable to Celanese Corporation (Table 8)

Advanced Engineered Materials 7 3 7 3 1 2 1
Consumer Specialties 2 2 6 3 3 — —
Total Materials Solutions 9 5 13 6 4 2 1
Industrial Specialties — — 1 (2 ) — 1 2
Acetyl Intermediates (3 ) 56 6 1 1 3 1
Total Acetyl Chain (3 ) 56 7 (1 ) 1 4 3
Other Activities(2) 12 4 110 101 2 3 4
Total 18 65 130 106 7 9 8
Adjusted EBIT / Adjusted EBIT Margin
Advanced Engineered Materials 142 27.5 % 143 29.4 % 479 33.2 % 121 33.2 % 127 34.8 % 111 30.4 % 120 34.3 %
Consumer Specialties 79 40.9 % 100 45.9 % 418 45.0 % 106 47.1 % 98 43.6 % 108 46.0 % 106 43.4 %
Total Materials Solutions 221 31.2 % 243 34.5 % 897 37.8 % 227 38.5 % 225 38.1 % 219 36.5 % 226 38.0 %
Industrial Specialties 26 9.9 % 25 10.2 % 106 10.8 % 18 8.2 % 25 10.2 % 30 11.5 % 33 13.0 %
Acetyl Intermediates 106 16.3 % 83 13.4 % 347 14.2 % 68 11.4 % 84 14.3 % 80 13.5 % 115 17.3 %
Eliminations — — 1 — — 1 —
Total Acetyl Chain 132 16.0 % 108 13.6 % 454 14.5 % 86 11.5 % 109 14.3 % 111 14.2 % 148 17.6 %
Other Activities(2) (27 ) (18 ) (73 ) (24 ) (15 ) (18 ) (16 )
Total 326 21.6 % 333 22.6 % 1,278 23.7 % 289 22.0 % 319 24.1 % 312 23.1 % 358 25.5 %
___________________________
(1) Net earnings (loss) attributable to NCI is included within the Acetyl Intermediates segment.
(2) Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 2 - Supplemental Segment Data and Reconciliation of Segment Adjusted EBIT and Operating EBITDA - Non-GAAP Measures - Unaudited (cont.)

Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions, except percentages)
Depreciation and Amortization Expense(1)
Advanced Engineered Materials 26 24 92 21 22 25 24
Consumer Specialties 11 11 44 11 11 11 11
Total Materials Solutions 37 35 136 32 33 36 35
Industrial Specialties 10 8 34 9 9 8 8
Acetyl Intermediates 26 26 107 26 27 27 27
Total Acetyl Chain 36 34 141 35 36 35 35
Other Activities(2) 2 2 11 4 2 2 3
Total 75 71 288 71 71 73 73
Operating EBITDA / Operating EBITDA Margin
Advanced Engineered Materials 168 32.6 % 167 34.3 % 571 39.5 % 142 39.0 % 149 40.8 % 136 37.3 % 144 41.1 %
Consumer Specialties 90 46.6 % 111 50.9 % 462 49.7 % 117 52.0 % 109 48.4 % 119 50.6 % 117 48.0 %
Total Materials Solutions 258 36.4 % 278 39.4 % 1,033 43.5 % 259 44.0 % 258 43.7 % 255 42.5 % 261 43.9 %
Industrial Specialties 36 13.7 % 33 13.5 % 140 14.3 % 27 12.3 % 34 13.9 % 38 14.5 % 41 16.2 %
Acetyl Intermediates 132 20.3 % 109 17.6 % 454 18.6 % 94 15.7 % 111 18.8 % 107 18.1 % 142 21.4 %
Eliminations — — 1 — — 1 —
Total Acetyl Chain 168 20.3 % 142 17.9 % 595 19.0 % 121 16.2 % 145 19.0 % 146 18.7 % 183 21.8 %
Other Activities(2) (25 ) (16 ) (62 ) (20 ) (13 ) (16 ) (13 )
Total 401 26.6 % 404 27.5 % 1,566 29.1 % 360 27.5 % 390 29.5 % 385 28.5 % 431 30.7 %
___________________________

(1)

Excludes accelerated depreciation and amortization expense, which amounts are included in Certain Items above. See Table 1 for details.

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).
Table 3
Adjusted Earnings (Loss) per Share - Reconciliation of a Non-GAAP Measure - Unaudited
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
per share per share per share per share per share per share per share
(In $ millions, except per share data)
Earnings (loss) from continuing operations attributable to Celanese Corporation 239 1.72 183 1.30 902 6.19 160 1.12 265 1.83 221 1.50 256 1.73
Income tax provision (benefit) 40 56 122 (5 ) 15 52 60
Earnings (loss) from continuing operations before tax 279 239 1,024 155 280 273 316

Certain Items attributable to Celanese Corporation (Table 8)

18 65 130 106 7 9 8
Refinancing and related expenses — — 6 — 4 — 2
Adjusted earnings (loss) from continuing operations before tax 297 304 1,160 261 291 282 326
Income tax (provision) benefit on adjusted earnings(1) (48 ) (49 ) (197 ) (44 ) (49 ) (48 ) (55 )
Adjusted earnings (loss) from continuing operations(2) 249 1.79 255 1.81 963 6.61 217 1.52 242 1.67 234 1.59 271 1.83
Diluted shares (in millions)(3)
Weighted average shares outstanding 138.6 140.6 144.9 141.9 144.0 146.5 147.4
Incremental shares attributable to equity awards 0.4 0.4 0.8 0.7 0.6 0.6 0.7
Total diluted shares 139.0 141.0 145.7 142.6 144.6 147.1 148.1
______________________________

(1)

Calculated using adjusted effective tax rates (Table 3a) as follows:

Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In percentages)
Adjusted effective tax rate 16 16 17 17 17 17 17

(2)

Excludes the immediate recognition of actuarial gains and losses and the impact of actual vs. expected plan asset returns.

Actual PlanAsset Returns

ExpectedPlan AssetReturns

(In percentages)
2016 6.9 7.3

(3)

Potentially dilutive shares are included in the adjusted earnings per share calculation when adjusted earnings are positive.

Table 3a
Adjusted Tax Rate - Reconciliation of a Non-GAAP Measure - Unaudited
Estimated Actual
2017 2016
(In percentages)
US GAAP effective tax rate 18 12
Discrete quarterly recognition of GAAP items(1) — 1
Tax impact of other charges and adjustments(2) (1 ) 3
Utilization of foreign tax credits — —
Changes in valuation allowances, excluding impact of other charges and adjustments(3) (1 ) 2
Other(4) — (1 )
Adjusted tax rate 16 17
______________________________

Note: As part of the year-end reconciliation, we will update the reconciliation of the GAAP effective tax rate for actual results.

(1)

Such as changes in tax laws, deferred taxes on outside basis differences, changes in uncertain tax positions and prior year audit adjustments.

(2)

Reflects the tax impact on pre-tax adjustments presented in Certain Items (Table 8), which are excluded from pre-tax income for adjusted earnings per share purposes.

(3)

Reflects changes in valuation allowances related to changes in judgment regarding the realizability of deferred tax assets or current year operations, excluding other charges and adjustments.

(4)

Tax impacts related to full-year forecasted tax opportunities and related costs.
Table 4
Net Sales by Segment - Unaudited
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Advanced Engineered Materials 516 487 1,444 364 365 365 350
Consumer Specialties 193 218 929 225 225 235 244
Total Materials Solutions 709 705 2,373 589 590 600 594
Industrial Specialties 262 245 979 219 245 262 253
Acetyl Intermediates 649 619 2,441 597 589 592 663
Eliminations(1) (85 ) (70 ) (288 ) (67 ) (71 ) (74 ) (76 )
Total Acetyl Chain 826 794 3,132 749 763 780 840
Other Activities(2) — — — — — — —
Intersegment eliminations(1) (25 ) (28 ) (116 ) (27 ) (30 ) (29 ) (30 )
Net sales 1,510 1,471 5,389 1,311 1,323 1,351 1,404
___________________________

(1)

Includes intersegment sales as follows:

Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Industrial Specialties (1 ) (1 ) (3 ) (1 ) (1 ) (1 ) —
Acetyl Intermediates (109 ) (97 ) (401 ) (93 ) (100 ) (102 ) (106 )
Intersegment eliminations (110 ) (98 ) (404 ) (94 ) (101 ) (103 ) (106 )

(2)

Other Activities includes corporate SG&A expenses, the results of captive insurance companies and certain components of net periodic benefit cost (interest cost, expected return on plan assets and net actuarial gains and losses).

Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited
Three Months Ended June 30, 2017 Compared to Three Months Ended March 31, 2017
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 4 — 2 — 6

(1)

Consumer Specialties (10 ) (2 ) — — (12 )
Total Materials Solutions — (1 ) 1 — —
Industrial Specialties 2 3 2 — 7
Acetyl Intermediates (1 ) 5 1 — 5
Total Acetyl Chain — 5 1 (2 ) 4
Total Company — 3 1 (1 ) 3

Three Months Ended March 31, 2017 Compared to Three Months Ended December 31, 2016

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 35 — (1 ) — 34

(2)

Consumer Specialties 3 (6 ) — — (3 )
Total Materials Solutions 22 (2 ) — — 20
Industrial Specialties 11 1 — — 12
Acetyl Intermediates (2 ) 6 — — 4
Total Acetyl Chain 2 5 (1 ) — 6
Total Company 11 2 (1 ) — 12
___________________________

(1)

2017 includes the effect of the acquisition of the nylon compounding division of Nilit Group.

(2)

2017 includes the effect of the SO.F.TER. S.p.A. acquisition.

Three Months Ended December 31, 2016 Compared to Three Months Ended September 30, 2016

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 1 — (1 ) — —
Consumer Specialties 2 (2 ) — — —
Total Materials Solutions 2 (1 ) (1 ) — —
Industrial Specialties (7 ) (2 ) (2 ) — (11 )
Acetyl Intermediates — 2 (1 ) — 1
Total Acetyl Chain (2 ) 1 (2 ) 1 (2 )
Total Company (1 ) 1 (1 ) — (1 )

Three Months Ended September 30, 2016 Compared to Three Months Ended June 30, 2016

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials (1 ) 1 — — —
Consumer Specialties (4 ) — — — (4 )
Total Materials Solutions (2 ) — — — (2 )
Industrial Specialties (6 ) — (1 ) — (7 )
Acetyl Intermediates — — — — —
Total Acetyl Chain (2 ) — (1 ) 1 (2 )
Total Company (2 ) — — — (2 )
Table 4a
Factors Affecting Segment Net Sales Sequentially - Unaudited (cont.)
Three Months Ended June 30, 2016 Compared to Three Months Ended March 31, 2016
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 6 (2 ) 1 — 5
Consumer Specialties (3 ) (1 ) — — (4 )
Total Materials Solutions 2 (2 ) 1 — 1
Industrial Specialties 4 (1 ) 1 — 4
Acetyl Intermediates (11 ) — — — (11 )
Total Acetyl Chain (7 ) (1 ) 1 — (7 )
Total Company (4 ) (1 ) 1 — (4 )

Three Months Ended March 31, 2016 Compared to Three Months Ended December 31, 2015

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 12 — — — 12
Consumer Specialties 6 (7 ) — — (1 )
Total Materials Solutions 10 (3 ) — — 7
Industrial Specialties 9 (3 ) — — 6
Acetyl Intermediates 7 (4 ) — — 3
Total Acetyl Chain 8 (4 ) — (1 ) 3
Total Company 9 (4 ) — — 5
Table 4b
Factors Affecting Segment Net Sales Year Over Year - Unaudited
Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 44 (2 ) (1 ) — 41
Consumer Specialties (9 ) (9 ) — — (18 )
Total Materials Solutions 23 (4 ) (1 ) — 18
Industrial Specialties (1 ) 3 (2 ) — —
Acetyl Intermediates (4 ) 14 (1 ) 1 10
Total Acetyl Chain (3 ) 12 (2 ) (1 ) 6
Total Company 8 5 (1 ) — 12

Three Months Ended March 31, 2017 Compared to Three Months Ended March 31, 2016

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 44 (3 ) (2 ) — 39
Consumer Specialties (2 ) (8 ) (1 ) — (11 )
Total Materials Solutions 25 (5 ) (1 ) — 19
Industrial Specialties 1 (2 ) (2 ) — (3 )
Acetyl Intermediates (12 ) 7 (2 ) — (7 )
Total Acetyl Chain (9 ) 5 (2 ) 1 (5 )
Total Company 5 1 (2 ) 1 5

Three Months Ended December 31, 2016 Compared to Three Months Ended December 31, 2015

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 20 (2 ) (1 ) — 17
Consumer Specialties 2 (11 ) — — (9 )
Total Materials Solutions 12 (6 ) — — 6
Industrial Specialties (1 ) (6 ) (1 ) — (8 )
Acetyl Intermediates (4 ) (2 ) (2 ) 1 (7 )
Total Acetyl Chain (4 ) (3 ) (2 ) 1 (8 )
Total Company 2 (4 ) (1 ) 1 (2 )

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 16 (4 ) — — 12
Consumer Specialties (2 ) (7 ) — — (9 )
Total Materials Solutions 8 (5 ) — — 3
Industrial Specialties (1 ) (9 ) (1 ) — (11 )
Acetyl Intermediates (3 ) (11 ) — 1 (13 )
Total Acetyl Chain (3 ) (12 ) — 2 (13 )
Total Company 1 (9 ) — 2 (6 )

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 8 (4 ) 1 — 5
Consumer Specialties 2 (8 ) — — (6 )
Total Materials Solutions 5 (5 ) 1 — 1
Industrial Specialties (1 ) (8 ) — — (9 )
Acetyl Intermediates (5 ) (13 ) — 2 (16 )
Total Acetyl Chain (4 ) (12 ) — 2 (14 )
Total Company — (10 ) — 1 (9 )

Three Months Ended March 31, 2016 Compared to Three Months Ended March 31, 2015

Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 5 (2 ) (1 ) — 2
Consumer Specialties 17 (9 ) — — 8
Total Materials Solutions 9 (5 ) — — 4
Industrial Specialties — (9 ) (1 ) — (10 )
Acetyl Intermediates 6 (13 ) (2 ) 2 (7 )
Total Acetyl Chain 5 (13 ) (2 ) 1 (9 )
Total Company 7 (10 ) (2 ) 1 (4 )
Table 4c
Factors Affecting Segment Net Sales Year Over Year - Unaudited
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Volume Price Currency Other Total
(In percentages)
Advanced Engineered Materials 11 (2 ) — — 9
Consumer Specialties 4 (8 ) — — (4 )
Total Materials Solutions 8 (5 ) — — 3
Industrial Specialties (1 ) (8 ) (1 ) — (10 )
Acetyl Intermediates (2 ) (10 ) (1 ) 2 (11 )
Total Acetyl Chain (2 ) (10 ) (1 ) 2 (11 )
Total Company 2 (8 ) (1 ) 2 (5 )
Table 5
Free Cash Flow - Reconciliation of a Non-GAAP Measure - Unaudited
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Net cash provided by (used in) investing activities (325 ) (64 ) (439 ) (247 ) (54 ) (63 ) (75 )
Net cash provided by (used in) financing activities 21 (270 ) (759 ) (292 ) 265 (259 ) (473 )
Net cash provided by (used in) operating activities 298 192 893 (47 ) 304 349 287
Capital expenditures on property, plant and equipment (54 ) (62 ) (246 ) (60 ) (58 ) (58 ) (70 )
Capital (distributions to) contributions from NCI (4 ) (4 ) (24 ) (9 ) (9 ) (6 ) —
Free cash flow(1)(2) 240 126 623 (116 ) 237 285 217
______________________________

(1)

Free cash flow is a liquidity measure used by the Company and is defined by the Company as net cash provided by (used in) operating activities, less capital expenditures on property, plant and equipment, and adjusted for capital contributions from or distributions to Mitsui & Co., Ltd. ("Mitsui") related to our joint venture, Fairway Methanol LLC ("Fairway").

(2)

Excludes required debt service and capital lease payments of $27 million and $56 million for the years ending December 31, 2017 and 2016, respectively.
Table 6
Cash Dividends Received - Unaudited
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Dividends from equity method investments 59 50 131 15 6 73 37
Dividends from cost method investments 29 29 108 26 26 29 27
Total 88 79 239 41 32 102 64
Table 7
Net Debt - Reconciliation of a Non-GAAP Measure - Unaudited
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16
(In $ millions)
Short-term borrowings and current installments of long-term debt - third party and affiliates 384 107 118 118 92 119 116
Long-term debt, net of unamortized deferred financing costs 2,931 2,851 2,890 2,890 2,923 2,464 2,487
Total debt 3,315 2,958 3,008 3,008 3,015 2,583 2,603
Cash and cash equivalents (511 ) (501 ) (638 ) (638 ) (1,252 ) (735 ) (716 )
Net debt 2,804 2,457 2,370 2,370 1,763 1,848 1,887
Table 8
Certain Items - Unaudited
The following Certain Items attributable to Celanese Corporation are included in Net earnings (loss) and are adjustments to non-GAAP measures:
Q2 '17 Q1 '17 2016 Q4 '16 Q3 '16 Q2 '16 Q1 '16 Income Statement Classification
(In $ millions)

Employee termination benefits(1)

2 2 11 — 3 3 5 Other charges (gains), net
Plant/office closures (3 ) 57 4 1 2 — 1 Cost of sales / SG&A / Other charges (gains), net
Business optimization — — 7 3 1 1 2 Cost of sales / SG&A
Asset impairments — — 2 1 — 1 — Other charges (gains), net
(Gain) loss on disposition of business and assets, net 2 — (4 ) (2 ) (2 ) — — (Gain) loss on disposition, net
Commercial disputes — — (2 ) (2 ) — — — Other charges (gains), net
Write-off of other productive assets — — 4 1 1 2 — Cost of sales / R&D
Employee benefit plan changes 1 — 1 — — 1 — Cost of sales / SG&A / R&D
Actuarial (gain) loss on pension and postretirement plans — — 102 102 — — — Cost of sales / SG&A / R&D
Start-up costs — — 2 — 1 1 — Cost of sales
Mergers and acquisitions 7 9 3 2 1 — — Cost of sales / SG&A
InfraServ ownership change 8 — — — — — — Other charges (gains), net / Equity in net earnings (loss) of affiliates
Other 1 (3 ) — — — — — Equity in net earnings (loss) of affiliates
Certain Items attributable to Celanese Corporation 18 65 130 106 7 9 8
______________________________

(1)

Primarily associated with site shutdown costs.
Table 9
Return on Invested Capital (Adjusted) - Presentation of a Non-GAAP Measure - Unaudited
2016

(In $ millions,except percentages)

Net earnings (loss) attributable to Celanese Corporation 900

Adjusted EBIT (Table 1)

1,278
Adjusted effective tax rate (Table 3a) 17 %
Adjusted EBIT tax effected 1,061
2016 2015 Average
(In $ millions, except percentages)
Short-term borrowings and current installments of long-term debt - third parties and affiliates 118 513 316
Long-term debt, net of unamortized deferred financing costs 2,890 2,468 2,679
Celanese Corporation stockholders' equity 2,588 2,378 2,483
Invested capital 5,478
Return on invested capital (adjusted) 19.4 %
Net earnings (loss) attributable to Celanese Corporation as a percentage of invested capital 16.4 %

Celanese Corporation

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Source: Celanese Corporation

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