Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, reported record GAAP diluted earnings per share of $17.06 and record adjusted earnings per share of $18.12 for full year 2021. The Company reported 2021 net sales of $8.5 billion, 51 percent higher than the previous year. Higher net sales were driven by pricing and volume increases over the prior year of 39 percent and 10 percent, respectively. Celanese successfully offset $1.1 billion in raw material, energy, and logistics cost inflation over 2020 to deliver consolidated operating profit of $1.9 billion and adjusted EBIT of $2.5 billion for the year, both records. The Company generated record operating cash flow of $1.8 billion and record free cash flow of $1.3 billion. As part of its strategic plan to drive earnings per share growth, the Company deployed $2.6 billion to organic investments, M&A, and share repurchases in 2021. In addition, during 2021 the Company returned $304 million in cash to shareholders via dividends.
Celanese also reported fourth quarter GAAP diluted earnings per share of $4.83 and adjusted earnings per share of $4.91. The Company generated operating cash flow of $584 million and free cash flow of $415 million in the quarter.
“I thank our teams for the commitment and agility they demonstrated in what was an exceptionally volatile year. They successfully navigated a series of external challenges including Winter Storm Uri, supply chain and logistics disruptions, China production curtailments, and the resurgence of multiple COVID-19 variants to deliver record 2021 adjusted earnings per share that exceeded our prior record performance by a remarkable 65 percent,” said Lori Ryerkerk, chairman and chief executive officer.
Fourth Quarter 2021 Financial Highlights:
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Three Months Ended |
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December 31, |
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September 30, |
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December 31, |
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(unaudited) |
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(In $ millions, except per share data) |
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Net Sales |
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Engineered Materials |
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707 |
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684 |
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572 |
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Acetate Tow |
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129 |
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128 |
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134 |
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Acetyl Chain |
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1,476 |
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1,489 |
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910 |
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Intersegment Eliminations |
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(37 |
) |
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(35 |
) |
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(25 |
) |
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Total |
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2,275 |
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2,266 |
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1,591 |
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Operating Profit (Loss) |
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Engineered Materials |
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67 |
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91 |
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62 |
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Acetate Tow |
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4 |
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12 |
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|
|
30 |
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Acetyl Chain |
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535 |
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|
517 |
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|
186 |
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Other Activities |
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(89 |
) |
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(84 |
) |
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(75 |
) |
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Total |
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517 |
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536 |
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203 |
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Net Earnings (Loss) |
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526 |
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507 |
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1,454 |
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Adjusted EBIT(1) |
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Engineered Materials |
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113 |
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137 |
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82 |
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Acetate Tow |
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38 |
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|
46 |
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|
59 |
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Acetyl Chain |
|
536 |
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|
|
517 |
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|
187 |
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Other Activities |
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(35 |
) |
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(52 |
) |
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(28 |
) |
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Total |
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652 |
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648 |
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300 |
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Equity Earnings and Dividend Income, Other Income (Expense) |
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Engineered Materials |
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30 |
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40 |
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15 |
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Acetate Tow |
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34 |
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34 |
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29 |
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Operating EBITDA(1) |
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745 |
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|
739 |
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387 |
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Diluted EPS – continuing operations |
$ |
4.83 |
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$ |
4.67 |
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$ |
12.50 |
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Diluted EPS – total |
$ |
4.79 |
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$ |
4.56 |
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$ |
12.50 |
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Adjusted EPS(1) |
$ |
4.91 |
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$ |
4.82 |
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$ |
2.09 |
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Net cash provided by (used in) investing activities |
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(1,286 |
) |
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(108 |
) |
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979 |
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Net cash provided by (used in) financing activities |
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(99 |
) |
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(228 |
) |
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(933 |
) |
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Net cash provided by (used in) operating activities |
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584 |
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|
630 |
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|
|
274 |
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Free cash flow(1) |
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415 |
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|
520 |
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|
181 |
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Year Ended December 31, |
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2021 |
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2020 |
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(unaudited) |
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(In $ millions, except per share data) |
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Net Sales |
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Engineered Materials |
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2,718 |
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2,081 |
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Acetate Tow |
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514 |
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519 |
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Acetyl Chain |
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5,430 |
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3,147 |
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Intersegment Eliminations |
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(125 |
) |
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(92 |
) |
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Total |
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8,537 |
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5,655 |
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Operating Profit (Loss) |
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Engineered Materials |
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411 |
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235 |
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Acetate Tow |
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56 |
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118 |
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Acetyl Chain |
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1,819 |
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563 |
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Other Activities |
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(340 |
) |
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(252 |
) |
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Total |
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1,946 |
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664 |
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Net Earnings (Loss) |
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1,896 |
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1,992 |
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Adjusted EBIT(1) |
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Engineered Materials |
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571 |
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|
403 |
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Acetate Tow |
|
207 |
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|
|
249 |
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Acetyl Chain |
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1,849 |
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|
568 |
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Other Activities |
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(154 |
) |
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(89 |
) |
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Total |
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2,473 |
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1,131 |
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Equity Earnings and Dividend Income, Other Income (Expense) |
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Engineered Materials |
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127 |
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|
115 |
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Acetate Tow |
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146 |
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126 |
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Operating EBITDA(1) |
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2,835 |
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1,475 |
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Diluted EPS – continuing operations |
$ |
17.06 |
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$ |
16.85 |
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Diluted EPS – total |
$ |
16.86 |
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$ |
16.75 |
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Adjusted EPS(1) |
$ |
18.12 |
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$ |
7.64 |
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Net cash provided by (used in) investing activities |
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(1,119 |
) |
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|
592 |
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Net cash provided by (used in) financing activities |
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(1,042 |
) |
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(1,471 |
) |
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Net cash provided by (used in) operating activities |
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1,757 |
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1,343 |
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Free cash flow(1) |
|
1,263 |
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|
950 |
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______________________________ |
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(1) |
See “Non-US GAAP Financial Measures” below. |
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Full Year Business Segment Overview
Engineered Materials
Engineered Materials reported record net sales of $2.7 billion in 2021, an increase of 31 percent over the prior year. Net sales growth was driven by volume and price which increased from 2020 by 15 percent and 12 percent, respectively. The business delivered volume growth to meet elevated 2021 demand despite significant sourcing and supply chain constraints that resulted in 18 kt of lost production across the year. Full year GAAP operating profit of $411 million and adjusted EBIT of $571 million, increased from the prior year by $176 million and $168 million, respectively. As a result of commercial initiatives across the year, the business nearly offset approximately $300 million in year over year raw material, energy, and logistics cost inflation. Affiliate earnings of $126 million increased $11 million over the prior year driven by improved performance across all affiliates.
Acetyl Chain
In 2021, the Acetyl Chain generated record net sales of $5.4 billion, an increase of 14 percent over the previous annual record. Pricing increased over the prior year by 62 percent due to strong demand, tightened industry conditions, and Acetyl Chain commercial actions. Pricing expansion more than offset over $700 million in raw material, energy, and logistics cost inflation in 2021 from the prior year. Despite challenges to production including Winter Storm Uri, China energy curtailments, and supply chain disruptions, the Acetyl Chain delivered 9 percent higher volume over the prior year by utilizing its global production network and industry sourcing. The Acetyl Chain generated record GAAP operating profit of $1.8 billion and record adjusted EBIT of $1.8 billion at margins of 33 percent and 34 percent, respectively.
Acetate Tow
Acetate Tow reported net sales of $514 million, a 1 percent decline from 2020 due to a 1 percent pricing decline. GAAP operating profit was $56 million and adjusted EBIT was $207 million for the year and reflected the impact of significantly elevated acetyls and natural gas costs. Dividends from affiliates in 2021 were $146 million, an increase of $20 million over the prior year due to strong affiliate performance.
Recent Highlights:
- Completed the acquisition of the Santoprene™ TPV elastomers business of Exxon Mobil Corporation for $1.15 billion, strengthening the existing elastomers portfolio and bringing a wider range of functionalized solutions into targeted growth areas.
- Completed a new GUR® ultra-high molecular weight polyethylene (UHMW-PE) production line at Bishop, Texas, adding 15 kt of manufacturing capacity.
- Honored by The Women’s Forum of New York for female representation on the Celanese Board of Directors.
- Announced a joint collaboration with Mitsubishi Chemical Advanced Materials to further develop mechanical recycling solutions for both post-industrial and post-consumer sources of polyoxymethylene (POM).
Fourth Quarter 2021 Business Segment Overview
Engineered Materials
Engineered Materials generated record net sales of $707 million in the fourth quarter due to a sequential price increase of 5 percent that offset a volume decrease of 1 percent. As a result of four consecutive quarters of pricing expansion, fourth quarter 2021 pricing reflected a 20 percent increase over the same quarter last year. The business continued to offset the majority of raw material, energy, and logistics cost inflation which drove higher costs of approximately $60 million sequentially. Fourth quarter GAAP operating profit of $67 million and adjusted EBIT of $113 million both declined by $24 million from the prior quarter as a result of accelerated inflation in European natural gas prices and persistent supply chain disruptions which constrained production of the business and its affiliates. Affiliates earnings declined by $9 million sequentially, largely due to supply chain disruptions.
Acetyl Chain
The Acetyl Chain generated net sales of $1.5 billion in the fourth quarter due to a 10 percent sequential expansion in pricing that offset a 10 percent reduction in volume. Amid ongoing moderation in acetic acid and VAM industry pricing in China, the business shifted more volume to the Western Hemisphere. Higher pricing in the fourth quarter more than offset approximately $60 million in raw material, energy, and logistics cost inflation from the prior quarter. Fourth quarter GAAP operating profit was $535 million and adjusted EBIT was $536 million at margins of 36 percent. The Acetyl Chain limited the fourth quarter volume impact of significant external production disruptions, including approximately 80 kt of lost production due to supplier constraints, by flexing its global production network and sourcing from the industry.
Acetate Tow
Acetate Tow generated net sales of $129 million during the fourth quarter, which reflected a sequential price increase of 1 percent and stable volume. Fourth quarter GAAP operating profit of $4 million and adjusted EBIT of $38 million both declined by $8 million sequentially due to higher energy, acetyls, and logistics costs. Dividends from affiliates in the quarter were $34 million, consistent with the prior quarter.
Cash Flow and Tax
The Company generated record operating cash flow of $1.8 billion and record free cash flow of $1.3 billion in 2021. Capital expenditures in the year were $467 million as the Company progressed on several key projects including the 1.3 million ton acetic acid expansion in Clear Lake, Texas. The Company returned $1.3 billion in cash to shareholders during 2021, including $1.0 billion of share repurchases and $304 million of dividends.
The effective U.S. GAAP tax rate was 15 percent for 2021 compared to 11 percent for 2020. The lower effective tax rate for 2020 was due to non-recurring tax benefits related to certain divestiture and reorganization transactions. The full year adjusted tax rate was 15 percent for 2021 versus 12 percent in the prior year due to increased earnings in high tax jurisdictions.
Outlook
“The early 2022 order book reflects continued strong demand for our products across most end markets,” said Lori Ryerkerk. “While we continue to closely monitor the impact of COVID-19 variants on demand conditions, the persistent inflationary and volatile supply chain backdrop remains our greatest challenge. Our record 2021 performance demonstrates the ability of our employees and business models to preserve our profitability amid inflation. We anticipate that sequential margin expansion in the first quarter in our downstream businesses, led by Engineered Materials, will help to offset anticipated moderation in Acetyl Chain pricing conditions and drive expected first quarter adjusted earnings of $4.30 to $4.60 per share. With a strong start to the year, we remain confident in our ability to achieve adjusted earnings of at least $15.00 per share in 2022.”
A reconciliation of forecasted adjusted earnings per share to U.S. GAAP diluted earnings per share is not available without unreasonable efforts because a forecast of Certain Items, such as mark-to-market pension gains/losses, is not practical. For more information, see “Non-GAAP Financial Measures” below.
The Company’s prepared remarks related to the fourth quarter will be posted on its website at investors.celanese.com under Financial Information/Financial Document Library on January 27, 2022. Information about Non-US GAAP measures is included in a Non-US GAAP Financial Measures and Supplemental Information document posted on our investor relations website under Financial Information/Non-GAAP Financial Measures. See also “Non-GAAP Financial Measures” below.
