Celanese Corporation (NYSE:CE) Q4 2022 Earnings Call Transcript

Lori Ryerkerk: Look, I don’t think there is a concern internally. As we’ve said since the time we did the deal, I mean, there are always levers that we can do. I mean from an asset sale standpoint, again, we don’t feel we’re in a position we have to do an asset sale. I mean we did food ingredients because we have the right partner with the structure we wanted that would give us both benefits and allow us both to participate in the growth in that business. And so the timing was right to do that. And I would say we will continue to be opportunistic with our businesses, both our legacy businesses as well as our acquired businesses. If and when we have the right buyer at what we think is a fair price, of course, we would consider it.

But we believe that although this year has started slow, the recovery we expect to see this year, our ability to generate cash from working capital and others that we will be able to meet the expectations of the rating agencies this year as well as next year and into the future. Scott?

Scott Richardson: Yes. I mean, look, we viewed this as a near-term challenge that required a near-term solution, and that was to amend the covenants. We’re still pushing to get to that 3x levered at the end of 2024. And it really starts with, as Lori talked about, generating cash. Generating cash to pay down debt, lower that interest cost. I talked about the M&M incremental interest of $550 million to $600 million. We have legacy interest of $60 million to $70 million, lower that by paying down debt. And then also find ways at which to lower that interest cost through redomiciling some of that debt as we talked about earlier on the call. So it is really just about systematically bringing the debt down through cash generation.

Matthew DeYoe: Okay. I know I appreciate that. And then on the VAM and EVA side. So I know acetic acid is pretty stable from a supply perspective outside of yourself and what you’re doing. But it sounds a call for like decent VAM and EVA capacity growth over the next two years. Does that impact your spreads? I know demand growth there has been pretty good. Does that get absorbed? How do we think about that?

Lori Ryerkerk: Yes. So if you look at what’s happening, there are some builds going on. So acetic acid, we do expect one start-up in 2023, late 2023. In China, we’re also expecting a few VAM start-ups between ’23 and ’24. But if you look at the typical growth that we see for the acetyl chain, we need a full plan kind of every other year. So I don’t think the rate of growth that we’re seeing is inconsistent with the growth in the world. We are still at fairly high utilization. Again, I think the fact that we are at high utilizations will keep the volatility a bit more. So we’ll do as we saw in fourth quarter, you may — during periods of low demand and seasonality, go to the cost curve, but that can recover quite quickly. But I don’t see it having a major impact on our margins going forward on kind of a long-term or full year basis.

Operator: Our next question is coming from David Begleiter from Deutsche Bank. Your line is now live.

David Begleiter: Thank you. Lori, in the comments, you mentioned some destocking in the Americas in paints and coatings and construction applications. Can you give a little more color on what you’re seeing there and where we are in that process?