Surabhi Varshney – Vice President-Investor Relations Mark Rohr – Chairman and Chief Executive Officer Scott Sutton – Chief Operating Officer Kevin Oliver – Chief Accounting Officer and Interim Chief Financial Officer.

Mike Sison – KeyBanc Capital Markets David Begleiter – Deutsche Bank Bob Koort – Goldman Sachs Ghansham Panjabi – Robert W. Baird Dan Rizzo – Jefferies Frank Mitsch – Wells Fargo Securities P.J.

Juvekar – Citi John Roberts – UBS Duffy Fischer – Barclays Vincent Andrews – Morgan Stanley Dan DiCicco – RBC Capital Markets Kevin McCarthy – Vertical Research Partners Jeff Zekauskas – JPMorgan Hassan Ahmed – Alembic Global Aleksey Yefremov – Nomura Instinet.

Good morning, and welcome to the Celanese Fourth Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Surabhi Varshney, Vice President-Investor Relations. Please go ahead..

Thank you, Auston. Welcome to the Celanese Corporation’s fourth quarter 2017 Earnings Conference Call. My name is Surabhi Varshney, Vice President-Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; Scott Sutton, Chief Operating Officer; and Kevin Oliver, Chief Accounting Officer and Interim Chief Financial Officer.

Celanese Corporation's fourth quarter 2017 earnings release was distributed via Business Wire yesterday after market close. Slides and prepared remarks for the quarter were also posted on our website at www.celanese.com in the Investor Relations section.

As a reminder, some of the matters discussed today and included in our presentation may include forward-looking statements concerning, for example, our future objectives and plans. Please note the cautionary language contained in the posted slides. Also, some of the matters discussed and presented include references to non-GAAP financial measures.

Explanations of these measures and the reconciliations to the comparable GAAP measures are included with the press release and on our website in the Investor Relations section under Financial Information. The earnings release and non-GAAP reconciliations have been submitted to the SEC on the Form 8-K.

The slides and prepared comments have also been submitted to the SEC on a separate Form 8-K. This morning, we'll begin with introductory comments from Mark Rohr and then open up for your questions. I'd like to turn the call over to Mark now..

Great, thanks, Surabhi, and welcome to everyone listening in today. Our prepared comments were shared with earnings yesterday, so I will kick off with a few comments and then take your questions. Let me first highlight our recent agreement to acquire Omni Plastics.

Omni specializes in custom compounding of nylon and combining Omni with our Nilit and SO.F.TER acquisitions creates a global nylon franchise and increases nylon to 50% of AEM’s net sales.

We expect the acquisition to be EPS neutral for 2018 and contribute about $0.10 once synergies are achieved and we’re looking forward to working alongside of very capable colleagues at Omni. Now to tow JV, we have received regulatory approval in four of the six jurisdictions.

In Europe as part of the Commission Phase II review process, we received a statement of objections, which we look forward to address in the next few weeks. We strongly believe in the value created by the JV and then preparation have completed the creation of a new legal entity and operating structure for the cellulose derivative business.

Turning to 2017 fully consolidated results, I am pleased to report GAAP earnings of $6.19 per share, and record adjusted earnings of $7.51 per share. The Acetyl Chain core income was $575 million, a 27% improvement over 2016. Core income margin of 17.1% exceeded a previous high in 2016 by 260 basis points.

Our asset base that spans the globe combined with a unique commercial flexibility enabled us to respond swiftly to industry and market dynamics throughout the year. Materials Solutions generated core income of $900 million in 2017 and net sales of $2.9 billion, both records.

Advanced Engineered Materials set new highs with segment income of $567 million, an expansion of $88 million over 2016 from growth in base business, new acquisitions, and higher affiliate earnings. AEM's segment income margin for 2017 was 27.1%, 610 basis points lower than the prior year mainly from margin dilutive acquisitions.

Volume increased 46% in 2017 year-over-year, from growth in organic polymers and acquisitions. Consumer Specialties segment income was $333 million and declined year-over-year due to lower tow price and volume in 2017, which reflected lower demand and depressed utilization rates across the tow industry.

Shifting to 2018, we are starting with strong momentum in the Acetyl Chain and expect a combination of our strategic and global footprint and a flexible supply chain to drive $0.35 to $0.45 of growth in adjusted earnings per share.

In AEM, growth in both new and legacy polymers, along with increasing success in China partially offset by planned turnarounds puts adjusted earnings per share growth for AEM at about $0.50 to $0.60 per share. Consumer Specialties should be relatively flat versus 2017 and the tow JV should be neutral to earnings upon close.

The recent Tax Cut and Jobs Act will have a positive impact on our adjusted tax rate in 2018 lowering it by approximately 2% to 14%. The tax benefit should offset investments and resources required to support our accelerated growth, which we estimated roughly $0.15 of earnings.

All-in we are increasing earnings guidance per share in 2018 to 10% to 14% with the first half roughly 25% to 35% higher than the second and most of that difference occurring in the first quarter.

Let me close by reminding you that our Investor Day is scheduled for May 1st of this year in New York, where we will outline our Strategy 3.0 and highlight growth plans and structural opportunities before us through 2020. Hope you can join us. With that, I will turn it over to Surabhi for your questions..

Thank you, Mark. [Operator Instructions] Auston, please open the lines for Q&A now..

[Operator Instructions] Your first question comes from Mike Sison with KeyBanc Capital Markets. Please go ahead..

Hey, good morning. Nice end to the year there..

Good morning Mike. Thank you..

Mark, in terms of AEM margins were squeezed a little bit.

How do you think pricing is coming along to recoup some of that as you head into 2018?.

Yes, there has been a margin squeeze, as we talked about. Every business that we're buying is materially lower margin, and we've been pretty clear about the need to increase that.

Specifically, in the fourth quarter, Mike, in addition to that squeeze from the dilutive aspects, we also got a little pinched on raws, and we were pinched a bit on unit operations. We had a number of unit operation issues throughout the quarter. So we expect to start recovering that as we enter the first quarter and from there.

Scott, you want to add?.

Yes, I would just add that Mike even in the fourth quarter as well, we've done a lot of work in this business to dampen seasonality as well. Part of that dampening comes through selling more in Asia, so you see that impact also.

The other thing, you might even see some of the press releases we've come out with pricing as well as we work to recover that moving into the first quarter because conditions are right to be able to do that..

And as follow up for AEM, I mean, volume growth has been really on a roll. Your new product generation programs have been great.

What do you see as the opportunities for growth in 2018 for AEM? And maybe nylon sounds exciting, but are there any other areas or markets that you see opportunities for growth?.

Well this is Scott again. I mean, look, I would say every market that we operate in, in AEM, we're able to grow volume. I mean, we even grew volume in auto very nicely in the fourth quarter of 2017 because it is all about that model. We're a bit market-agnostic.

So I mean, we're predicting that we'll be able to close 3,000 projects when you think about project-by-project growth, but we also still have a nice M&A pipeline that's at work for bolt-ons..

Great thank you..

Thank Mike..

Our next question is from David Begleiter with Deutsche Bank. Please go ahead..

Thank you, good morning..

Good morning, David..

Mark, in AI in the quarter, very strong results.

How much do you think was influenced by the Eastman outage?.

Well don’t have a real number on that. I mean, I think Eastman contributed a little bit to the momentum. But clearly, if you go back a bit, David, we actually, at the first year, we expected the market to tighten, especially in Asia, and we expected that shift to occur in methanol.

And then it actually started before any of these outages you talked about. Actually, it started at the end of the third quarter there. So not – it was part of it but not a huge part..

And long term, you discussed maybe doing a JV with this business or, I guess, a tow-like transaction to take out some capital.

Is that still an option or a possibility in the near to medium term?.

Yes, well absolutely. I think what we're really saying is that it's our expectation that the value equation received by our shareholders continues to go up. We think our company is woefully undervalued, and we have every intention to pushing it in a reasonable period of time to a $20 billion company.

And so we are entertaining all options relative to doing that. So our belief system, though, is that the way to do that is to create stronger and stronger value equations. And if you've done that, then I think you can maybe do something separate with the business.

So first, I would like to build it a bit more, to be honest, and have it be recognized for the real value it's contributing. And then, take another step and do something with it like the tow JV..

Thank you very much..

Thank you..

Our next question is from Bob Koort with Goldman Sachs. Please go ahead..

Thanks, I think you guys have some pretty interesting windows into what's going on in China given your presence there. I know in your prepared remarks, you talked about the likely sustainability of some of these environmental efforts. I guess, I'm curious on a couple of points there.

One, have you suffered at all from any of your downstream customers that have maybe been subject to some of these curtailments? And then secondly, can you give us any window on the volatility you might expect going forward from the MTO market and what influence that would have on your operations or profitability?.

So, what’s interesting in China today Bob is, none of these policies or practices are new. The government has been promoting for a period of time, but there is now a connectivity between the municipalities and provinces to really these things happen. So it's reached a level of maturity in principle to drive real change.

So that's the sort of the fundamental shift that we're now seeing in the region. So assets are being shut down and are, if they're continuing to operate at reinvestments, they have to then justify a stronger economic – a strong economic case for that. And they're struggling to do that.

Unless they want to have scope or two, they really got the ability to move their business to a higher place. So all those things are structurally and fundamentally good. We have not directly suffered.

We did have one company I'm thinking about in particular that did some work for us in the polymer business, was under shutdown orders, and we managed to work with them a bit and keep it operational until we could get our technology in place and our capability in place to replicate what they were doing. And now they're down, I believe.

So I think there is some element of working with as the effectivity is occurring. At least in our case, it was. Yes, you're right on the MTO. One of the things we've seen, of course, the big MTO units are now up and running. And we're definitely at – I'm not sure what today's price is – at $1,400 a ton.

There is margin even at $400 a ton methanol for these guys to do well. I do believe, though, this industry is one of – it's built in a way that can be turned on or off to match the – to deal with that arbitrage that exists between C1 and C2 chemistry. So we expect some volatility in the second half for this year, but it won't be sustained.

So we do expect that. That's one of the reasons we've been a little bit cautious about forecasting continued – driving growth fully completely through the year on that chain. We'll know more as we get up and as we end the first quarter and get to the second.

But I do expect volatility, but I think fundamentally, that's changed, Bob, so it's not going to go back like it did..

And just a quick follow-up.

Any inspiration to build that second methanol plant given where margins are?.

We are very inspired..

Our next question comes from Ghansham Panjabi with Robert W. Baird. Please go ahead..

Hey guys good morning. You mentioned in your prepared remarks that post Omni, nylon is roughly 15% of the AEM segment.

Of the incremental project growth that you're seeing in AEM, can you just give us a sense as to how fast nylon has grown versus your other molecular platforms?.

Yes, this is Scott. I mean, it's not growing any faster. The whole product solution platform is growing fast across all of AEM-wide. It's Not disproportionate across the different polymers. Of course, our nylon business is growing just because of the acquisitions we've done, marrying up to some of the organic business that we had.

But in general, the whole platform is growing quickly. Nothing is outpacing something else..

Okay, thanks. And just my second question is on the tax rate and the 14% for 2018. Is that the right steady-state tax rate to think about for the company post the tax reform? Or is anything discrete to the year that may not repeat going forward? Thanks so much..

Yes, you’re welcome. It’s – and Kevin may want to give more color on this. But as you look at the tax laws that are – the clarifications being read out, we expect this to be a little bit lumpy in – over the next several years as we settle in exactly what those rates are.

We think 14% is sustainable, but it could be plus or minus a percent or so as we go through the next several years..

Yes this is Kevin. I think that’s a good response, Mark. We do think that rate is sustainable, but at the same time, yes, this is a significant change in tax law. You're going to continue to see IRS make some announcements in notifications, which they've done even just last week.

So there could be some minor changes here or there, but we're not expecting a material impact..

Okay, thanks..

Your next question comes from Laurence Alexander with Jefferies. Please go ahead..

Hi guys this is Dan Rizzo on for Laurence. So if we look at the new project growth rate of the last few years, it's been pretty high.

I was just wondering if we're getting to a point now where it has to naturally just kind of cool off a bit as we head into 2018, 2019?.

Yes, so this is Scott. I mean, no. I mean, the answer is no to that. I think we're going to project 3,000 closes here in 2018, and we'll lift that number again in 2019. I mean, we continue to refine the model to be able to handle more and more projects, but also have a higher batting average at the same time. So I expect that number to keep climbing..

Okay. And then – sorry? And then with your M&A, obviously, the focus is on AEM. But I was wondering if there are opportunities in other segments at all for – I don't know, potential bolt-ons or larger acquisitions..

Yes we in the Chain business, there are some great opportunities to bring additional molecules into that portfolio. And we've been very active in that regard. We just haven't been able to quite pull them off yet. But you shouldn't be surprised to see investments in both cores as we take and try to extend these business models further..

Are expectations unrealistic in that area?.

Say that again, Dan I’m sorry..

In the Acetyl Chain, are expectations in M&A too high or too – I mean, are people expecting too much in terms of price?.

No I don’t think, I think – I think it’s – no, the way we do deals is we go out and knock on doors, and so you just get rejected a lot in that process. So we're not looking for properties that are auctioned. We're trying to create the opportunity.

So no, it's not really been a question of fit and willingness on the part of the person that you're asking to sell the properly..

Thank you very much..

Yes..

Our next question is from Frank Mitsch with Wells Fargo Securities. Please go ahead..

Good morning, folks and nice to enter the year..

Thanks, Frank..

Just a clarification on your – the tow approvals from China, Russia, Turkey and Mexico.

Just to be clear, there is no remedies or contingencies that are part of those approvals, are there?.

No, no, they're approved. So we're waiting Korea and the European Commission. And really the focus is with the European Commission and going through that process. So yes..

Yes, you outlined nicely Phase 2 there, and we'll see what happens there. But – all right. Terrific. The guidance, obviously, roughly $0.40 improvement in 2018 versus 2017 on acetyls. You got about $0.20 upside relative to The Street in just Q4 alone.

Could that be the area where if there – where – I don't want to use the term sandbagging or something like – that you might feel little bit better about being able to outperform in 2018 given where trends are and you guys are, et cetera?.

I think so. If you put a straight edge on the trend line, you've end up with a higher number. And all we're saying, though, is that there's been such a monumental change in China. You've got – and you've got a lot of good things going your way. You've got a lot of methanol out of the market, about six million annual tons out in the last quarter.

That comes back on as we get into the end of the first quarter, start of the second. There's a new plant starting up here in the U.S., 1.8 million ton plant. And we're not sure exactly what ethanol play is going to be in China now. It's going to reflect back on MTO and methanol. I use methanol flow as indicator.

And it's not so much our indicator, but it does move that market up and down a bit. So I think that it will be wrong to just continue that slope. But equally, I'm looking at Scott here. I think our feeling is that there's opportunity there, and we'll be able to communicate more about that after we get through the first quarter..

Yes. I mean, Mark – I mean, I would just add that we continue to enhance our model and you're seeing the benefits of that as we drive this outcome. But also, that model has the opportunity to flex up and down a little bit quarter-to-quarter, depending on what kind of dynamics are out there.

And there can be some cracks in those dynamics later in the year. As a result, you get some of that quarter-to-quarter fluctuation. But every single year, that business will be growing profitably..

Terrific. Thank you..

Thank you..

Our next question is from P.J. Juvekar with Citi. Please go ahead..

Yes, hi..

Hi P.J..

On acetyls, you've done a great job of balancing the system to your advantage.

Now what is the risk here? If China were to add more capacity in acetyls, will the landscape get disturbed? What risks are we talking about here with the system?.

Well, I mean, there's always theoretical risk, P.J. Really, practically speaking, China is not very desirous of overinvesting in big chemistry these days, so you're not seeing a lot of that. I mean, you're seeing some technical investments, which what I'd call MTO, to bring on olefins capacity, blended olefins capacity.

But to build more of these plants means you're building more coal gasification. It means you're adding cost in a system that, to be honest, is not global low cost. So they can't really export with the kind of fever that you like.

So it's pretty hard for me to imagine that any bank is going to fund the kind of money it would take to really go and build a competitive business here. I don't see that at all.

So I think the days of that for everybody, not just for Celanese, this year would kind of go on, and you're going to see what investments you see would be very responsible and very needed to fit local demand and/or unique chemistry that maybe can be exported. But I wouldn't think so, not in our Chain business.

Scott?.

Yes. I agree. Look, I mean, fundamental dynamics, fundamental conditions in China are much better. I mean, think about it. Mark, as that continued to grow, there hasn't been a lot of acetyl capacity addition on top of that. The competitors that are there are having to run in more of a structured format in terms of environmental and economics as well.

All those things come together and all that old discussion around nameplate capacity and utilization doesn't apply anymore. I mean, this industry is operated at a much better utilization rate now. And that's likely to be the case for many – a number of years going forward..

Okay.

So then you don't expect a whole lot of new acetyls capacity? Is that fair?.

Yes. I think that's fair. Yes, there will some selective ones, right? But there is growth in that marketplace..

Okay. And just quickly, my second question on your tax rate. It's gone from 21% in 2014 to 16%. And now with the new tax law, it goes down to 14%. Can you talk about the progression of your tax rate since 2014 and sort of what factors drove that? Thank you..

Kevin, do you want to….

Yes, so this is Kevin. I think you see a lot of the growth we've had, has been foreign growth. You've seen changes in tax rates across the globe now in nearing what you see in the U.S. with increasing rates. So I think that has been a trend that with the profile of the growth of our business and where that’s happened, that’s been favorable to us.

In the U.S., you saw a nice reduction in rate, 14% reduction in rate. We lost some deductions here in the U.S. as kind of a giveback, but it did have a nice net 2% benefit moving to 2018..

Yes. So as we moved, P.J., to a European structure, we were, in many ways, a little bit ahead of this, I would say. And so the rate you saw, it sort of like has been now continued with the lowering of the rate in the U.S. structure. So you’re moving more towards a European system than a historical U.S. system, and our trend line just follows that..

Okay, great. Thank you..

Great, thank you..

Our next question is from John Roberts with UBS. Please go ahead..

Thank you. In acetyls, you mentioned that you sourced the equivalent of a full plant for early in the year.

Is that basically the market was a little loose early in the year and you took that volume – excess volume off the market to help tighten things and then just resold it at a profit later in the year?.

Okay. This is Scott. Yes, thanks for the question. I mean, we did source quite a lot, but there’s really a number of reasons that, that goes on. One, of course, we had a large turnaround earlier in the year; two, Hurricane Harvey impacted us in the Gulf Coast; but three, and the largest reason is that trading is part of our daily model.

So we traded a couple hundred thousand tons last year, and we traded with more than 20 partners. And I would expect that to be a feature of our model going forward. It’s not near as big as our self-production, but it is part of the model..

And then back to the question on the antitrust review on cig tow.

In Europe, are there any remedies in discussion yet? Or you’re still expecting that you’ll get approval in Europe without any remedies?.

No, we’re going through a process of working with the objections in there, and we’re not opposed to a remedy if it will be needed. I felt it was needed by the commission, but we haven’t got to that point in the process. We think that stands on its own, and we’re arguing that with the commission.

But if we need a remedy, we think there is perhaps some options there..

Okay, thank you..

Thank you..

Our next question is from Duffy Fischer with Barclays. Please go ahead..

Yes, good morning..

Good morning..

Question with the new plant and the changes at Ibn Sina, of the growth this year kind of in your guidance, what percent is that?.

It’s pretty modest for us. We are getting 1% step-up in Ibn Sina, which is in itself pretty handsome. If I just draw a circle around Ibn Sina, they have a couple of big site outages there that they’re doing this year, which is a pretty negative impact.

And so there’s going to be a modest step-up there, I think, we tagged at another $10 million, which is less than half of the total step-up. Be mindful as well that when we have a new plant up and running, we’re also bringing a lot of palm in the market, and there will be some ripple effect to that, and we’ve got to deal with it.

You’ll see it, but you won’t see quite as much stuff as the math would tell you would see..

Okay. You mentioned the new plant coming up in the U.S. with methanol.

What’s your view of the uranium plants that are due to come online this year? Chance? No chance? How would you kind of plug those into a supply-demand model?.

We think they’ll come back..

Okay. Okay, good. All right, thank you guys..

Yes, thank you..

Our next question is from Jeff Zekauskas with JPMorgan. I apologize about that. There seems to be a good bit of distortion on Mr. Zekauskas’ line. I’ll see if I can get somebody to sort that out with him. We’ll move on to the next for now. Our next question is from Vincent Andrews with Morgan Stanley. Please go ahead..

Thank you. Good morning, everyone. First, a follow-up on the AI, sort of the trading component of it.

Can you just help us understand what type of risk is involved in that type of activity? Are you able to hedge? Or are you just only taking on this sort of third-party volume when you – it’s sort of more of an agency model or you already now serve the other end of the side of the trade?.

I think what we’re doing, and Scott said it’s a small portion of our total, is we have the ability to produce with any feedstock known to me and any location doesn’t have it. And so when you look at that equation, that also means we can make decisions every day about buying and selling.

And we can buy – where we might go up in volume, we can actually lower our own production rate and have something to fill it. So we participate in the market as a full player. So I think that – I mean, there’s no more risk in that than the ongoing risk every day we have moving, producing and selling the millions of tons that we do..

Okay, good enough. And just a question on the Omni acquisition. Your prepared remarks mentioned they have some type of IP around working with recycled content, which is becoming a bigger issue, particularly in the EU.

Can you give us a better sense of what it is that they have and how you can expand it? And do you need to invest in it? And how large do you think that opportunity is?.

Yes. I mean – this is Scott. I mean, Omni just has a nice part of their business whereby they start with, call it, post-consumer resin, and particularly nylon and polypropylene. And that’s a part of the business that Celanese hasn’t participated in historically in a very big way.

So this is another new growth opportunity as we add it to our solutions portfolio. And they have some know-how and IP around that as well that we’ll expand outside of just the U.S..

Okay. Thank you very much..

Our next question is from Dan DiCicco with RBC Capital Markets. Please go ahead..

Thanks. Just another one on acetyls.

Given the recent strength, is it fair to assume a decent amount of input cost pressure could be coming in Q1 with the raws moving up? And then what kind of offsets here as the guidance you guys gave implies Q1 could be one of the stronger quarters this year?.

Well, I mean, there’s always raw material volatility in that Chain business, but I don’t think – I’m looking at Scott. I don’t think we see that being particularly onerous in the first quarter more than in any other quarter that’s out there. So that’s not really the issue. I think we feel pretty good about the first quarter.

The question really is, will that floor stay quite as high as it pull back a little bit as we get later in the year for those reasons I mentioned earlier?.

Got it. Yes. And just as a follow-up, still on the raws. You guys are still expecting methanol prices to stay above 400 this year, or at least average 400. Is it fair to say that you guys have factored in that new capacity from Iran? And then have you thought about potential ethylene price erosion? And what that does to MTO for some of the new U.S.

crackers in the Gulf Coast?.

Yes. I think I was probably a bit too – I probably pushed out a bit further my comments than I really wanted to. I mean, we expect methanol prices to be up year-over-year, and they’re up quite handsomely today. But we do expect more pressure in the back half of the year as these new volumes come on.

And we’re expecting as part of that, the MTO plants to run flat out like they are now. So my kind of gut is that you’re going to see some reduction in that methanol value as you get on through the year.

And for that reason, around your first comment, we expect the first half of the year to be stronger than the second half numbers that [indiscernible] but you could see quarter-to-quarter volatility that could even be inconsistent with that, if I can say that. So yes, we’re off to a good start for the year.

We should have a pretty okay first quarter in that process. We think the first half will be stronger than the second half for these reasons – these structural reasons that I mentioned..

Great. Thanks..

Our next question is from Kevin McCarthy with Vertical Research Partners. Please go ahead..

Good morning.

Mark, with regard to the cigarette filter tow market, can you elaborate on your expectations for 2018 and perhaps touch upon things like inventory levels, input cost expectations and selling price trajectory for that business?.

Well, I make a few comments and then Scott is going to comment. That business, we’ve said that we anticipate keeping the earnings relatively flat, and we do, and we’re doing that through productivity, though. That business is still stressed, and we expect it to continue to be stressed as cigarette demand around the world continues to fall.

So we don’t – compared to input prices of those things, that really doesn’t – none of those things matter as much as the hard reality that the market continues to collapse. And we’re just managing that process in a pretty effective way through productivity.

Scott, want to fill in anything?.

No, I would echo exactly the same thing, look, demand continues to fall somewhat. There’s certainly price pressure in the industry. It’s competitive. But we offset that with productivity around taking out costs. And you’ll see us do that in 2018, and 2018 will be pretty similar to 2017 in terms of earnings..

Okay. And then second if I may.

What was your volume growth in Advanced Engineered Materials exclusive of acquisition activity?.

Yes. So this is Scott. I mean, exclusive of acquisitions for the full year, we grew volume about 13% for the fourth quarter. It was similar to that, about 13% as well..

Okay. And then one last one, if I may.

Can you talk about the pension injection of $316 million? Was that done for tax reasons or reasons of strategic flexibility?.

Well, I think both. I mean, it was a – we had been – you kind of know this. We had – a few years ago, we had a pretty sizable pension liability, and we've systematically worked it down. We think at the highest level principally, that's the right thing to do.

We have something like 25,000 retirees – legacy retirees at Celanese, and it means a lot to us to make sure those men and women were all taken care of forever. We were advantaged to do it in the fourth quarter given the interest rates and given the change in the tax law.

And that comes through as a benefit to us from a cash flow point of view this year. So we feel pretty good about that move. Now we're able to balance it pretty well, and we think that we have completely divorced ourselves from worrying about pensions.

But we certainly will be able to balance it, protect it more, and I hope at some point in the future be able to annuitize it and kind of take the pension accounting a little bit off the table..

I appreciate the color. Thank you..

The next question is from Jeff Zekauskas with JPMorgan. Please go ahead..

Thanks very much.

When do you expect the Blackstone transaction to close? Or are the probabilities too uncertain to really forecast the date?.

Well, we said last year when we visited in June or whenever that was, we expected it midyear, and I think that's still kind of the view that we have. That can move around a little bit, depending on the heat of the day. But that seems to be when we look at the timeline and the pace of things, we think that's what we'll see..

And for my follow-up, in Acetyl Intermediates, your EBITDA went up about $30 million sequentially.

Is that mostly from China, in Europe? Or if you had to divide it across your geographies, where were the larger sequential EBITDA benefits? Where were the smaller ones?.

Yes. And so Jeff, this is Scott. I mean, the best performance improvement came in Asia, particularly China. However, that has repercussions on the rest of the globe as well. So we got some margin expansion outside of China..

Okay. Did your U.S.

business grow sequentially or because of outages, no?.

Yes. No, I mean, all of it grew in terms of absolute margin expansion..

I mean, in terms of EBITDA dollars?.

Yes. In terms of EBIT or EBITDA, yes..

Okay, great. Thank you so much..

Our next question is from Hassan Ahmed with Alembic Global. Please go ahead..

Good morning, Mark. Mark, it's a two-part question on, obviously, in your prepared remarks, you talked about the sort of China pollution curb side of things. So two questions about that. One on the acetic side of things.

So within acetic, how much of a bump-up should we expect to see, let's say, in terms of global utilization rates from some of these curbs that have been talked about pollution-related in China? So that's one side of it. The other one is acetic raws. So obviously methanol, a large part of, obviously, the methanol growth story is predicated on MTO.

So should we expect to see any curbs on the sort of influx of new methanol capacity via the sort of coal to methanol side of things and, thereafter, MTO side of things as a result of this as well?.

Well – and have Scott hop in, in a little bit. We use the term now that's really instantaneous capacity, which is a view of kind of the operating environment of the day. And in that instantaneous capacity, it's quite often different than shell capacity that's out there.

And we have seen, as we went through the last year or so, we have seen instantaneous capacity rates continue to rise within China. And I'm looking at Scott here. I don't think we will see that changing or feel like that's going to change.

So whether that's 10 basis points or 12 basis points or something like that, but – so we're up in the 80s now, probably on the instantaneous today kind of rate. We don’t – equally, we don’t see that the supply-demand is such that it’s going to move around necessarily a whole a lot.

We’re not anticipating a bunch of new plants to be built for the reasons I mentioned earlier nor we think it will go back to some lower level in the future.

When you look at methanol, the methanol-MTO leak is the most important equation because really, it’s going to tell you about incremental methanol value in China, sets that floor, which has a big ripple effect around the world for the chain business that’s out there.

And if you believe that nat gas stays low in the U.S., which I think most of us believe, then it says that methanol globally is going to stay competitive relative to the average ethylene price in China. So methanol to MTO to ethylene, you should have a good window of arbitrage there available to those builders.

So we think MTO is going to stay strong in China and may even have more capacity added. But certainly, we think it’s going to stay strong. So we think those things naturally buffer themselves. Now if you get one, two, three, or four new methanol plants coming on the next four or five years, I mean, that may change a little bit.

But we kind of think the methanol is not going to stay in the low 200s like it had been. And It may go back different time to time. We think it’s shifted up and it’ll be in the 300s, in the mid-300s, and that’s a good place for us from an acetic acid point of view and that chain point of view. Scott, you want to...

Yes, Mark. I mean, I would just add, the impact on us with all these MTO dynamics, it really does interject a lot of volatility into the world and into our model. And we have the opportunity to capitalize on that volatility on the way up or on the way down. And you’ll see ethylene move around. Hence, you’ll see rates of MTO plants move around.

You’ll see methanol price move up and down because of that. It’s unlikely to get stuck like it got stuck in 2016 at a very low point..

Yes. These plants are big, and they’re complicated to run. And like we saw there early last year, when we had a major unit get operational difficulties, they ended up swinging 250,000 tons if I recall,-ish, 200,000 tons of methanol in and out of the market. So those swings Scott is talking about. So fundamentally, it’s been shifted up.

You’re going to have nonetheless more volatility because of that C1 to C2 connection going through these assets. At Celanese, we like high pricing and we like volatility, so it’s good for us..

Got it. And really quickly if I could sort of a follow-up on the methanol side of things. I mean, you talked about certain people sort of talked to you guys about the influx of new capacity in Iran.

But obviously, there’s some charter that Iran may actually consider converting most of their methanol facilities into MTO facilities, which obviously could be hugely bullish for methanol demand going forward.

How are you guys thinking about the Iranian sort of MTO conversion side of things?.

Well, I don’t – I mean, I’m going back. I’m an old guy. So Iranians are very capable. They have great technical acumen and great engineers. I have no doubt they can run anything they build. I think the more you invest in these businesses, though, the more technically complex they occur.

And it’s not for the faint of heart to get into that when you get in the C2 chemistry. So I guess, I’m a bit – they may do it – I think they do it in a modest fashion, just my gut, because the investments are still large, but who knows? If they put it in, they’ll run it. And I think if they run it, they’re going to consume more methanol.

So it gets back to this methanol dynamic. It’s good for us..

Understood. Very helpful. Thank so much..

Our next question is from Aleksey Yefremov with Nomura Instinet. Please go ahead..

Thank you. Good morning everyone. Mark, you just mentioned that you’re very excited about the potential to build a methanol plant in the U.S.

How do you think about the sizing of this plant and the timing? Is the idea here to just fully integrate or maybe go a little methanol to some degree?.

Yes, Alex. What I said is that we’re really enthusiastic about C1 chemistry chain. And we look at that methanol opportunity as an opportunity for C1 chemistry and especially in terms of how we think about working with other people to expand the molecules in our portfolio.

So I wouldn’t go quite so far as to say that I’m announcing the construction of a methanol plant today.

But it is certainly on the table for us, and it has been on the table and it's certainly on the table today for us and especially on the table as we talk to others about the things we can do together relative to growing our business, the C1 chemistry business..

Got it. Thank you for clarification. Staying with acetyls.

How do you look at seasonality in China? To what degree the tightness that we see right now is due to the seasonal shutdowns, either on the coal side or maybe downstream in acetyls or in methanol? So do you think just that seasonal impact will be there going forward? Or it's not really about that?.

Well, it's there to some extent. I mean, you certainly have the winter season and the winter heating season, which means that nat gas comes out of the market and goes in all of those applications, and there is some nat gas derivative there.

So the way we look at it – the way I look at it – Scott may do it differently, is it's almost like Chinese New Year. So you have before Chinese New Year kind of conduct and you have post conduct.

So I think you'll see that seasonality like we have seen it, but it – again, at this new stepped up rate, it has less of an impact than it used to have before..

Yes, I agree. I mean, but I think, look, disruptions are going to be part of every calendar year going forward, right? And it just so happens that there's a few more certainly in Asia as you approach Chinese New Year. In fact, there's just as many turnarounds on the calendar going forward as there's been over the last 12 months as well.

So I think we have a fairly consistent pattern..

I guess, just to clarify my question, you don't think some of your competitors are down because [indiscernible] methanol because of the seasonal shutdowns..

Well, definitely in China, there's been some, right? There's been some restriction on gas even transfer of where the coal origination is used as well. So you see those impacts. And yes, that's where see the most volatility today..

Got it. Thank you..

Auston, we’ll take one last question with the follow-up and then wrap up the call..

All right, thank you. And our last question will come from Matthew Blair with Tudor, Pickering, Holt. Please go ahead..

Hey, good morning Mark and Scott..

Good morning Matthew..

Just touching on Omni. What kind of end markets are you most excited about here? And then also on the financial side, any more color on why this deal is EPS-neutral this year given that it would boost revenue by 2%. And I thought it offered EBIT margins around where like SO.F.TER. and Nilit were..

Sure Matthew, thanks. Yes, Thanks for the question. I mean, the end markets, first of all, there's a few complementary markets to where we're already in. There's some auto. There's good electrical and electronics. But interestingly enough, it also provides us access to some markets that we don't participate in a big way today.

Most namely, the higher-end furniture market is a big part of their business, so we're excited about that as we can move some of our solutions and existing products into that market. As far as it being accretive or not, I mean, there is a step-up in some first-year costs that we have that basically make it a zero from an EPS standpoint.

And then I think you had a third one, too, but can you repeat that, Matthew?.

No, you covered it. My follow-up, we've seen some reports of unplanned issues, mostly regarding problems affecting Nanjing, Jurong and then your Clear Lake methanol facility.

Can you just provide any color here? What kind of financial impacts might this have? And how long do you expect these feedstock limitations to persist?.

Yes. Well, this is Scott again. I don’t we would talk about first quarter things that are going on. We have these impacts in the third quarter and, in particular, some in the fourth. And yes, we experienced issues with the cold now. We're not going to quantify those. They're not going to be gigantic but there is some small impacts..

This concludes our question-and-answer session. I would like to turn the conference back over to Surabhi Varshney for any closing remarks..

Thank you, Auston. We will now conclude the call. Thank you for all your questions and for listening in this morning. We’re available after the call to address any further questions you may have. Auston, please close the call now..

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..