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celanese 3q_2006_earnings_slides
1. Celanese 3Q 2006 Earnings
Conference Call / Webcast
Tuesday, October 31, 2006 9:00 a.m. CT
Dave Weidman, President and CEO
John J. Gallagher III, Executive Vice President and CFO
2. Forward Looking Statements, Reconciliation and Use of Non-GAAP Measures
to U.S. GAAP
This presentation may contain “forward-looking statements,” which include information concerning the company’s
plans, objectives, goals, strategies, future revenues or performance, capital expenditures, financing needs and other
information that is not historical information. When used in this release, the words “outlook,” “forecast,”
“estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” and variations of such words or
similar expressions are intended to identify forward-looking statements. All forward-looking statements are based
upon current expectations and beliefs and various assumptions. 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 forward-looking statements contained in this release.
Numerous factors, many of which are beyond the company’s control, could cause actual results to differ materially
from those expressed as forward-looking statements. Certain of these risk factors are discussed 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.
This presentation reflects three performance measures, operating EBITDA, adjusted earnings per share and net debt
as non-U.S. GAAP measures. The most directly comparable financial measure presented in accordance with U.S.
GAAP in our consolidated financial statements for operating EBITDA is operating profit; for adjusted earnings per
share is earnings per common share-diluted; and for net debt is total debt.
Operating EBITDA, a measure used by management to measure performance, is defined as operating profit
from continuing operations, plus equity in net earnings from affiliates, other income and depreciation and
amortization, and further adjusted for other charges and adjustments. Our management believes
operating EBITDA is useful to investors because it is one of the primary measures our management uses for
its planning and budgeting processes and to monitor and evaluate financial and operating results.
Operating EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to
operating profit as a measure of operating performance or to cash flows from operating activities as a
measure of liquidity. Because not all companies use identical calculations, this presentation of operating
EBITDA may not be comparable to other similarly titled measures of other companies. Additionally,
operating EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as
it does not consider certain cash requirements such as interest payments, tax payments and debt service
requirements nor does it represent the amount used in our debt covenants.
Adjusted earnings per share is a measure used by management to measure performance. It is defined as net
earnings (loss) available to common shareholders plus preferred dividends, adjusted for other charges and
adjustments, and divided by the number of basic common shares, diluted preferred shares, and options
valued using the treasury method. We provide guidance on an adjusted earnings per share basis and are
unable to reconcile forecasted adjusted earnings per share to a GAAP financial measure because a forecast
of Other Items is not practical. We believe that the presentation of this non-U.S. GAAP measure provides
useful information to management and investors regarding various financial and business trends relating
to our financial condition and results of operations, and that when U.S. GAAP information is viewed in
conjunction with non-U.S. GAAP information, investors are provided with a more meaningful
understanding of our ongoing operating performance. This non-U.S. GAAP information is not intended to
be considered in isolation or as a substitute for U.S. GAAP financial information.
Net debt is defined as total debt less cash and cash equivalents. We believe that the presentation of this
non-U.S. GAAP measure provides useful information to management and investors regarding changes to
the company’s capital structure. Our management and credit analysts use net debt to evaluate the
company's capital structure and assess credit quality. This non-U.S. GAAP information is not intended to
be considered in isolation or as a substitute for U.S. GAAP financial information.
4. Celanese Corporation Q3 2006 Highlights
3rd Qtr 2006 3rd Qtr 2005
in $ millions 9M YTD 9M YTD
(except EPS) 2006 2005
Net Sales 1,526 5,000 4,493
1,685
$0.49 $1.66
Adjusted EPS $0.79 $2.23
Operating EBITDA 252 802
322 936
≥ Quarterly net sales increase 10% from prior year
≥ Operating profit in Q3 up 111% on strong volumes, higher
margins and fewer other charges and adjustments
≥ Adjusted EPS in Q3 up 61% to $0.79
≥ Operating EBITDA in Q3 increases 28% to $322 million
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5. Integrated Hybrid Business Model
Drives Shareholder Value
≥ Chemical Products ≥ Continued robust demand
≥ Profitable growth in Asia
≥ Ticona ≥ Innovation and market penetration fuel high
growth
≥ Acetate Products ≥ Revitalization efforts on track
≥ Proposed Acetate Products Limited acquisition
≥ Performance Products ≥ Continues to deliver stable earnings and strong
cash flow
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6. John J. Gallagher III
Executive Vice President and Chief Financial Officer
7. Celanese Corporation Financial Highlights
3rd Qtr 2006 3rd Qtr 2005
in $ millions (except EPS)
Net Sales 1,526
1,685
Operating Profit 95
200
Net Earnings 45
109
Special Items
Other Charges/Adjustments 6 40
$0.49 2
$0.791
Adjusted EPS
Operating EBITDA 252
322
1. Based on diluted shares of 171.2 million as of Sept. 30, 2006, and a 25% effective tax rate
2. Based on diluted shares of 171.9 million as of Sept. 30, 2005, and a 24% effective tax rate
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8. Chemical Products
3rd Qtr 2006
in $ millions
Net Sales $1,206 up 11%
Operating EBITDA $234 up 16%
Third Quarter 2006:
> Strong earnings on continued high utilization across industry
> Significantly improved operating profit as increases in volume and
price outpaced higher raw material costs
> Impact of Celanese specific opportunities on operating margin
> Reduced dividends from Saudi cost investment (IBN Sina)
Strong integrated chain of acetyl products
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9. Ticona Technical Polymers
3rd Qtr 2006
in $ millions
Net Sales $230 up 8%
Operating EBITDA $66 up 32%
Third Quarter 2006:
> Increased penetration in key customer segments
> Operating margins expanded on increased volume and reduced
spending, offsetting higher raw material and energy costs
> Product/customer mix slightly affect year over year pricing
> Healthy demand in Europe
Focus on increased growth through innovation
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10. Acetate Products
3rd Qtr 2006
in $ millions
Net Sales $171 up 6%
Operating EBITDA $29 up 81%
> Revitalization still on track
> China venture tow expansion complete, moving forward on flake
expansion
Performance Products
3rd Qtr 2006
in $ millions
Net Sales $41 down 11%
Operating EBITDA $13 down 19%
> Stable earnings healthy sweetener demand
> Lower volume driven by timing of sales in the carbonated beverage
season; no change in underlying fundamentals
Attractive, cash generating businesses
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12. Capitalization
(in $millions)
Dec 31,
Sept 30,
2005
2006
513 390
Cash
1,613 1,708
Senior Credit Term Loan
- -
Senior Credit Revolver
- -
Floating Rate Term Loan
1,613 1,708
Total Senior Debt
800 800
Senior Sub Notes ($)
164 153
Senior Sub Notes ( *)
463 397
Other Debt
3,040 3,058
Total Cash Pay Debt
79 73
Discount Notes Series A
330 306
Discount Notes Series B
3,449 3,437
Total Debt
546 235
Shareholders' Equity
3,995 3,672
Total Capitalization
2,936 3,047
Net Debt(Total Debt Less Cash)
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* Translated at 1.266 - effective date Sept 30, 2006
13. 2006 Business Outlook
► Favorable industry dynamics
Chemical
Products ► Continued strong global demand
2006 Adjusted
► Increasing penetration in key customer
EPS Guidance
segments
Ticona $2.70 to $2.80
► Improved global demand
► Positive impact of COC sale continues
> Forecasted tax rate
► Improving earnings with revitalization on for 2006 of 27%
Acetate track
Products
► On path to targeted profitability levels
► Planned price declines continue
Performance
► Underlying business fundamentals
Products
unchanged
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14. 2006 Guidance
► Adjusted EPS: $2.70 to $2.80
► Depreciation/Amortization
• $275 - $300 million
► Cash Interest Expense
• $230 - $250 million
► Effective Tax Rate
• 27%
► Capital Expenditures
• $200 - $250 million
► CE Equity
• 158.6 million shares common stock outstanding
• 0.6 million stock option grants*
• 12 million shares convertible preferred
* Based on total of 11 million stock option grants valued using the Treasury Method as of Sept. 30,2006.
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16. Reg G: Reconciliation of Diluted Adjusted EPS
Ta ble 6
Adjuste d Ea rnings Pe r Sha re - Re concilia tion of a Non-U.S. GAAP Me a sure
Three Months Ended Nine Months Ended
Septem ber 30, Septem ber 30,
(in $ m illions, except per share data) 2006 2005 2006 2005
Earnings from continuing operations
77 216
before tax and m inority interests 181 490
N on-GAAP Adjustm ents:
Other charges and other adjus tm ents * 40 101
6 41
Refinancing cos ts - 102
- -
Adjusted earnings from continuing operations
117 419
before tax and m inority interests 187 531
Incom e tax provis ion on adjus ted earnings ** (28) (102)
(47) (143)
Minority interes ts (3) (41)
(2) (3)
Earnings from dis continued operations , net of tax and adjus tm ents *** (2) 6
(2) (3)
Preferred dividends (3) (7)
(3) (8)
81 275
Adjusted net earnings available to com m on shareholders 133 374
Add back: Preferred dividends 3 7
3 8
Adjusted net earnings for diluted adjusted EPS 136 84 382 282
Diluted shares (m illions)
Weighted average s hares outs tanding 158.5 158.5
158.6 158.6
As s um ed convers ion of Preferred Shares 12.0 10.9
12.0 12.0
As s um ed convers ion of s tock options 1.4 0.5
0.6 1.0
Total diluted s hares 171.9 169.9
171.2 171.6
Adjusted EPS from continuing operations 0.80 0.50 2.25 1.62
Earnings per com m on s hare from dis continued operations , net of
adjus tm ents 0.04
(0.01) (0.01) (0.02)
Adjusted EPS 0.79 0.49 2.23 1.66
* See T able 7 fo r details
** T he U.S. GA A P t ax rat e fo r the three m o nt hs ended Sept em ber 30, 2006 is 40% and nine m o nt hs ended Sept em ber 30, 2006 is 32%. T he c o m pany’ s adjus t ed
t ax rat e fo r the three m o nt hs ended Sept em ber 30, 2006 is 25% and t he res ulting year to date adjus ted tax rate is 27%. T he diff erenc e bet ween o ur US GA A P
t axes and o ur adjus t ed t axes are due to : (i) the fav o rable im pac t o f purc has e ac c o unt ing o n o ur net o perating lo s s es ($ 23 m illio n), and (ii) the elim inatio n o f
dis c rete t ax it em s no t related to t he c urrent perio d ($ 4 m illio n).
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*** D o es no t inc lude gain o n s ale related to dis c o ntinued o peratio ns .
17. Reg G: Reconciliation of Net Debt
Ta ble 5
Ne t De bt - Re concila tion of a Non-U.S. GAAP Me a sure
September 30,December 31,
(in $ m illions) 2006 2005
Short-term borrowings and current
ins tallm ents of long-term debt - third party and affiliates 155
205
Long-term debt 3,282
3,244
Total debt 3,449 3,437
Les s : Cas h and cas h equivalents 390
513
Net Debt 2,936 3,047
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18. Reg G: Reconciliation of Other Charges and Other
Adjustments
Ta ble 7
Re concilia tion of Othe r Cha rge s a nd Othe r Adjustme nts
Othe r Cha rge s: *
Three Months Ended Nine Months Ended
September 30, September 30,
(in $ m illions) 2006 2005 2006 2005
Em ployee term ination benefits 8 16
- 11
Plant/office clos ures 13 15
- -
21 31
Total restructuring - 11
As s et im pairm ents 1 25
- -
Ins urance recoveries as s ociated with plum bing cas es (4)
- - (3)
Other 37 **
- 2 4
Total - 24 12 89
Othe r Adjustme nts: ***
Three Months Ended Nine Months Ended
September 30, September 30,
(in $ m illions) 2006 2005 2006 2005
Executive s everance & legal cos ts related
to Squeeze-Out - -
5 28
Favorable im pact on non-operating foreign
exchange pos ition - (14)
- -
Advis or m onitoring fee - 10
- -
Purchas e accounting for inventories 16 16
Bus ines s Optim ization - -
4 4
Other - -
(3) (3)
6 16 29 12
Total
6 40 41 101
Total other charges and other adjustments
* Previously describ ed as Special Charges
** Termination of advisor monitoring fee
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*** These items are included in net earnings b ut not included in other charges.
19. Reg G: Reconciliation of Operating EBITDA
Ta ble 1
Se gme nt Da ta a nd Re concilia tion of Ope ra ting Profit (Loss) to Ope ra ting EBITDA -
a Non-U.S. GAAP Me a sure .
Three Months Ended Nine Months Ended
September 30, September 30,
(in $ m illions) 2006 2005 2006 2005
Ne t Sa le s
Chem ical Products 1,091 3,203
1,206 3,558
Technical Polym ers Ticona 212 674
230 691
Acetate Products 162 499
171 514
Perform ance Products 46 140
41 138
Other Activities * 55 75
69 198
Inters egm ent elim inations (40) (98)
(32) (99)
Total 1,685 1,526 5,000 4,493
Ope ra ting Profit (Loss)
Chem ical Products 101 436
170 475
Technical Polym ers Ticona 18 62
37 116
Acetate Products 4 24
23 75
Perform ance Products 13 41
10 43
Other Activities * (41) (157)
(40) (147)
Total 200 95 562 406
Equity Ea rnings a nd Othe r Income /(Ex pe nse) **
Chem ical Products 36 44
22 47
Technical Polym ers Ticona 15 43
13 42
Acetate Products - 2
- 21
Perform ance Products (2) (2)
- 1
Other Activities * (2) 8
11 9
Total 46 47 120 95
Othe r Cha rge s a nd Othe r Adjustme nts ***
Chem ical Products 19 23
3 10
Technical Polym ers Ticona 4 25
- (4)
Acetate Products 9 10
- -
Perform ance Products 1 1
- -
Other Activities * 7 42
3 35
Total 6 40 41 101
De pre cia tion a nd Amortiza tion Ex pe nse
Chem ical Products 45 118
39 118
Technical Polym ers Ticona 13 42
16 48
Acetate Products 3 21
6 18
Perform ance Products 4 10
3 11
Other Activities * 5 9
6 18
Total 70 70 213 200
Ope ra ting EBITDA
Chem ical Products 201 621
234 650
Technical Polym ers Ticona 50 172
66 202
Acetate Products 16 57
29 114
Perform ance Products 16 50
13 55
Other Activities * (31) (98)
(20) (85)
Total 322 252 936 802
* Other Activities primarily includes corporate selling, general and administrative expenses
and the results from AT Plastics and captive insurance companies.
** Includes equity earnings from affiliates and other income/(expense), which is primarily dividends
from cost investments.
*** Excludes adjustments to minority interest, net interest, taxes, depreciation, amortization and discontinued operations.
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