Good morning, and welcome to the Celanese Fourth Quarter 2018 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 Chuck Kyrish, Vice President, Treasurer and Investor Relations. Please go ahead..

Thanks, Jerry. Welcome to the Celanese Corporation fourth quarter 2018 earnings conference call. This is Chuck Kyrish. With me today are Mark Rohr, Chairman and Chief Executive Officer; Scott Richardson, Chief Financial Officer; and Todd Elliot, Senior Vice President, Acetyl Chain.

Today’s presentation includes forward-looking statements about expectations for the future results. Actual results might differ materially from these statements. Please see our SEC reports for risk factors relating any forward-looking statements. Our discussion today will also include references to non-GAAP financial measures.

You can find information related to these non-GAAP measures and reconciliation to their comparable GAAP measures on our website in the Investor Relations section. Form 8-K reports containing all of these materials are available on the SEC’s EDGAR system.

Celanese Corporation distributed its fourth quarter 2018 earnings release via Business Wire and posted slides and prepared remarks about the quarter in the Investor Relations section of our website yesterday after market close. Since we published our comments yesterday, we’ll go directly to your questions..

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Vincent Andrews with Morgan Stanley. Please go ahead..

Thank you, and good morning, everyone. Wondering if you could help us with the Acetyl Chain and just obviously a lot of volatility in the fourth quarter after a phenomenal year.

What would you think the range of outcomes is this year in 2019? And what are the dynamics that would bookend that? There was a lot of conversation in your prepared remarks about sort of the interplay of methanol and oil and ethylene. But maybe you could just unpack that for all of us and help us with a framework for modeling purposes..

Right. Well, let me – that’s a huge question. So this is Mark and I’ll kick that off, ask Todd to make some comments here. Let me start kind of from the beginning. I think a lot of this conundrum the world finds itself in today regarding sort of the economic environment really relates to the collapse in oil prices that occurred really last year.

And that collapse in oil prices kind of rippled through so many raw materials, petrochemical industry in a broad sense. And of course, that had huge impacts and ripple effects back on ethylene in China, the MTO in China and ultimately methanol. So you had all these dynamics that kind of rolled into that.

So we saw weakness and we saw slowdown really as we ended the fourth quarter. The back couple of months of the fourth quarter in the chain business, we saw some settling with that. And in that process of settling, we think that, that’s, I wouldn’t say run its course, but it seems to be kind of normalizing now at the level.

And we think we’re going to see that start to recover as we get into the end of this quarter and start the next quarter going forward. The broad dynamics are of that is it was – and Todd, again I’ll ask you to give some more color on this in a second. But really is around China and the impact in China that we saw, the pricing we saw in China.

And in many ways, it was a little bit contained in that region of the world. So we see and we feel that we have – and I’ll talk about this more when we talk about earnings, our earnings forecast. We think with this business is going to step down a little bit this year.

But we feel very good about the fundamentals of this business and the ongoing earning power to this business in this range of around $1 billion. So Todd, do you want to provide more clarity perhaps on just what you saw throughout..

Well, just on the note about global capacity utilization, so the macro fundamentals, we believe, are still in play. That is that when you look at the diversity of end uses across that, acetyl is growing around 3% per year.

Stack that up with the capacity picture, we still see those macro utilization rates in about the net 80% range across the whole system. So what Mark was describing is this end of the year, instantaneous utilization rate change mainly on slower demand, particularly in China.

So as that sorts itself through as we get into first part of 2019, you kind of march through the quarter, particularly after Chinese New Year, we think that will bump up those instantaneous utilization rates into – back up into the 80% range. And that will allow some price recovery over the course of the year..

And just as a follow-up, the decision to take the capacity out of Asia as you ramp up new capacity in the U.S., is the math effectively that the savings you’re going to get from doing that and the optimization more than offsets whatever sort of the EBITDA opportunity was there? And then obviously, you also get to take some capacity out of the market, which might help the earnings power of all your other assets.

Is that the right way to think about it?.

Yes. I think what we’re trying to convey here in a big sense – and it’s part of sort of the ongoing debate about whether people are giving value back to our shareholders for this business.

But we can – we’re – to be honest, we’re the only company in the world that can take and make these investments at very modest level, get this kind of high return on productivity only. So you don’t have to have a view that the market’s going to grow or the demand is needed for us to add yet another $100 million to our foundation.

So what we think that foundation are based on in the business is plus $100 million for that through these kinds of moves. And be it that or be it the VAM investments, that’s what you see.

So this is a way for us to, we think, keep balance within the – what we feel will be the demand picture as we have at that period of time with plenty of upside capacity to tackle that in a more EBITDA and return return-friendly fashion..

Yes, absolutely. It’s about always looking for another series of value creation steps that adds to the foundational level of earnings in acetyl. So this is the next wave that we’re embarking on, so bring significant production.

Ultimately, to Clear Lake, we have advantaged integration backwards to methanol, soon to be in carbon monoxide when that acquisition clears. Also we have other sources of CO there. First, we have the VAM downstream usage there on Clear Lake, just expanded that unit by 150,000 tons.

So think very good integration benefit, a huge range of operating rate flexibility more so than we have today particularly in the Asian side. So that helps us. And to Mark’s point, it’s largely a productivity measure when we look out on this. So it’s a nice combination of value addition steps..

Thank you. And welcome back to Chuck..

Thanks..

The next question comes from David Begleiter with Deutsche Bank. Please go ahead..

Thank you. Good morning. Mark, just on Engineered Materials, can you provide a little more color on the 2% operating profit growth in the quarter? Why was it so light? And looking forward to 2019, maybe expectations for that business in 2019..

Yes, I’ll start with the last one. We expect that business to grow – kind of as it has grown 10% kind of earnings contribution year-over-year. So you plug that into your model. If you look at the fourth quarter, we did see slowdown in this business as well.

We were out there pushing pricing a lot to tee up what we felt was a better return for many of our polymers as we entered 2019. And we’re doing that in the face of the destocking that was naturally occurring for the reasons that I listed for that.

So the world – what we really saw here for the quarter is we saw good uptick in both volume and pricing to be offset a lot by extraordinary costs that rolled through our system. From inventory costs that we had as we worked down some of our inventory, extraordinary cost with logistics and things like that really impacted it in a negative way.

So it’s really a more cost-driven reduction versus any kind of falloff in the base business..

Got it. And just on – sorry..

No, sorry, David. This is Scott Richardson. I just want to add there. I think it’s important also to remember the project wins that we had in the year were right on track with what we’ve said. So we finished north of 3,200 projects during the year. So the business continues to be on track for those controllable factors that we stated.

And we’re very clear about the importance of driving price as raws moved up during 2018 and we’re very successful in doing that. And that should yield benefits from a margin perspective moving in to 2019, which can lead to the growth that Mark talked about, around 10%..

Very good. And Mark, just now you reaffirmed the 2020 target, $12 a share, which now implies about 14% EPS growth in 2020 versus 2019.

Can you probably provide a bridge, given that’s a little bit of a robust target, given a pretty lackluster macro backdrop?.

Yes. Let me just – there’s – in the fundamental sense, if I look at it versus where we think we’ll end this year, that’s probably another $300 million or so of upside. In a real simple sense, we expect as we’re ending this year and starting next to be moving back into plus $100 million kind of range for the AC business.

We think that $1 billion, $950 million to $1 billion, is pretty much what is in the cards for us there. We expect we’re going to add another $100 million incrementally in EM as we go – as we move into – from 2019 to 2020.

In that process, we’ll have, of course, in AC, which is essentially to establish our basic strategy – I mean, in acetate tow, our basic strategy. That leaves a balance of the last time we were leasing $50 million that’s from M&A that we’ve got our eyes set on. And the other $50 million is productivity..

Great. Thank you very much, Mark and Scott..

Thank you..

The next question comes from Mike Sison with KeyBanc. Please go ahead..

Hey guys. Mark, when you think about the Acetyl Chain near term, I just want to make sure I understand. Can you maybe walk us through how those utilization rates went through the fourth quarter? And then I think I got the feel that it’s under 80% now.

And what could get that above 80% as we head into the second half of the year? Just want to make sure it’s more demand-related than supply-related..

Well, I’ll ask Todd to give specific numbers here. But in a broad sense, it’s not supply-related at all. The slowdown in China was just a slowdown. And so we saw industry utilization rates across the board in China well beyond AC drop.

End result, actually we saw less activity in terms of Clean Sky initiatives and stuff because actually there wasn’t nearly as much industrial production going on as you would normally have. So that in the fundamental sense is what happened. And I think we dropped into the very low 80s.

Now whether it was – whether we touched the 70% or not, we don’t know, but certainly stayed on 3 to 4 turns, I think, on capacity utilization on a short-term basis. We also believe that, that’s largely run its course. The business seems to have settled in. And this has happened in a very short period of time. That seems to have settled in.

And we have a fair degree of confidence that as Chinese New Year ends and some of these other problems get cleared up, we’re going to see it march right back up. But Todd, do you want to maybe give some specific numbers..

I think if you see the capacity at 15 million tons of global demand, 18 million tons of capacity. And that’s about 83%. And these are numbers that we talked about before. VAM is 6 million tons of demand, 7 million tons of supply, that’s about 85% utilization. We think those big macro numbers are still in play.

There have been little to no additions to that supply base. So this is really, as Mark described, an end of the year, first part of 2019 demand slowdown for various reasons, oil prices falling, ethanol prices falling, sentiment, trade, fill in the blank. Now that can quickly reverse itself when customers start buying again.

And this is particularly acute in China. It’s really what we’re describing here. If we look at our order books elsewhere in the world, in Europe, in Americas and then also when we extend beyond just the acetic acid discussion into vinyl acetate or emulsion, order books are actually pretty good at the start of the year.

So this is really a short China out in the near term. And that really speaks to that instantaneous dip under the mid-80% range, pick a number, probably high 70s or something for a few weeks here at the end of the year, start of the year.

But that, again once inventories dry out, once demand kicks back in, that can quickly start to come back into balance, which we expect it will..

Great. And then shifting gears to EM, the new projects continue to roll.

And what type of organic growth do you think EM could generate this year? And then is the pipeline for acquisition still pretty robust to build on that as you go forward?.

Yes. Mike, we expect to get back up into the mid to high single-digit type volume growth as we work our way into 2019. Now Q1, we think, will be a little bit softer on that. But we do expect to be able to grow. So we may be in the low single-digit year-over-year growth level in Q1.

But as we work our way into the balance of the year, as we see this destocking work itself out, we think that will recover. We continue to be very – we see the pipeline being very favorable for us. And we saw that play out even towards the end of the year as our growth that, for example, in automotive was around 3%, whereas the industry declined.

And so the controllable projects and the things we continue to work with our customers are there. And that’s going to get us back into what we think is going to be really good, positive volume growth numbers in 2019..

Great. Thank you..

Thank you..

The next question comes from Robert Koort with Goldman Sachs. Please go ahead..

Thanks. Good morning. Mark, can you talk about how much capital you had to spend or you did to spend on the syngas plant in Clear Lake? Is that a future strategy to get back with integrated? I guess, I don’t see the merits of that. But if you have better uses of your capital, I just want to….

The answer to your question, I’m not going to give you an exact number. But it will be public before too long. But that’s a legacy asset that actually Celanese owned years ago. It’s kind of embedded in our asset. And of course, we had the opportunity to acquire that.

When you look at in terms of reference to a new unit, it’s probably – it’s a fraction of the cost of a new unit. So it presents very favorable economics for us as we look at expanding acetic acid production there. So that’s how it plugs into it..

So that unit wasn’t supplying you currently?.

It was. But Air Products now – Linde is building a new unit. So old Linde had lost their – had lost that contract with us..

And you guys obviously got more aggressive in the market. You talked about being opportunistic, buying stock at about $100 in the fourth quarter.

Should we presume, given your optimism into 2019, second half of 2020 that you should be buying quite a bit of stock here in the first part of the year as well?.

Yes. We have $700 million still available to us between what we’ve promised you guys we’d buy and what’s authorized to buy. So we will continue to be opportunistic with that..

Got it. Thank you..

Thank you..

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

Hey, guys. Good morning.

I guess, back to the $100 million sort of productivity boost as part of your acetic acid network adjustments, can you sort of break that out between production, savings and logistics? And is it just not as important going forward to be as diversified from a feedstock standpoint?.

Yes, we think it is very important to be diversified from a feedstock standpoint. The economics associated with the asset bases that we have in the U.S. and in this next incremental investment in there is stunningly good. And it’s so good that it overcomes disadvantage you would normally see in logistics and things like that.

So it’s a unique opportunity for us to restructure, reconfigure, as Todd said, and drive just on constant volume and net lower cost base of approximately $100 million.

And the important message for you in that is you can present value that back today if you like to do that because it is a set $100 million and it’s not dependent on acetic acid pricing or those sorts of things to achieve. So that’s the message, the thematic that we’re trying to get across.

If we can take steps to increase and lift that floor, that foundation, whatever you may happen to feel it is and still position ourselves in it as this business grows, this capacity utilization tightens up, which we fully expect to happen, to have yet again more capacity available to drive the market around the world..

Okay. That’s helpful. And then just, Mark, in your prepared comments, you mentioned some of your U.S. customers seemed a bit more optimistic looking out to 2019. Can you sort of expand on that? And then maybe generally, can you touch on Europe as well? Thanks so much..

Yes. I think when you really – when you talk to, as we do – we’re privileged to have a great customer base working with us, works all the time. I think they in many ways are shocked or surprised with sort of the global anxiety that exists as we are. I’ll say our U.S.

customers, where everybody’s gone through a little bit of a stutter step here in the fourth quarter, on average are quite optimistic. They don’t – they see the fundamentals as being very strong, see the consumers largely in areas where we are still in there. We’ve lived through a rationalization and slowdown and all the capacity and things like that.

But when you look forward, they’re not expecting that to continue, expect those things to reverse a bit. So there’s a good bit of enthusiasm there. And as Todd said, the order patterns seem to reaffirm that, what we’re seeing right now. If you go to Asia, I’d say it’s the same thing. China went through this stutter step.

A lot of it is tied to anxiety over trade that’s there as well as normal seasonality, which has been missing there. So they’re sitting there waiting for Chinese New Year to end and with an anticipation that somehow we’ll find a way to moderate some of the anxiety to trade. So they’re not overly pessimistic.

And we look at fundamentals there, we think in the case of – if you would look it at although, which is probably the most public example, we’re expecting that business to not slide further but to actually rebound a bit as we entered this year. So our Chinese customers are not overly anxious or overly frightful right now.

I’d roll that into – if I look at Europe, and so in Europe, we talk largely Germany, there’s a fair amount of pessimism there. And it’s the anxiety over the exit of – Brexit. Brexit is an anxiety point. I think political pressures in country are an anxiety point. And they also feel like they’ve been impacted somewhat by Chinese trade.

So in the Rhine River, we see all the things. And I think that we see more pessimism on average out of Europe. And that’s very German-centric when I say that because most of our – or a lot of our big customers are in Germany. So I think what we see is we see Asia in some ways leading us out a bit, leading the world out of this kind of anxiety.

We don’t think the U.S. is going to be impacted very much. And we think as Asia starts to recover, you’ll see Europe stabilize and start to recover as well..

Terrific. Thanks so much, Mark..

The next question comes from Duffy Fischer with Barclays. Please go ahead..

Yes, good morning, fellows. A question just around the strategy in acetic acid coming back to you. I think the permit you filed last month showed a $425 million capital tag.

So one, is that a decent number? And two, how should we think about that impacting the overall capital spend to Celanese over the next three years?.

Yes. It’s in the range of the right number. That’s what I would say. And those are numbers we’re required to put in preliminary kind of numbers when we present the sort of permit application. So yes, it’s directionally correct.

I’m sorry, what was the second?.

Just the capital..

Yes. So $350 million to $400 million this coming year, I think, in CapEx, moving up as we get out into 2020 and 2021, where you’ll see most of this being spent. So yes, we’ll be moving above $400 million, I think, as we enter into the next several years beyond this year..

Okay. And then in the U.S., you’re still net short methanol even though you’re getting some from your JV partner. As you bring on this acetic acid, does that drive you to want to own more methanol? What’s the strategy integration there? And the syngas plant, will you be net short syngas in the U.S.

even if you were short methanol?.

I’ll start this. And Todd, you hop into this as well, please. We have a wonderful partnership with Mitsui with methanol. They’re the world’s most efficient methanol plant and highly regarded as such. I’ll let Todd talk about the options there that the guys are looking at to expand and to grow.

On syngas, it’s a really good fit with the first phase of capacity we announced with this expansion of acetic acid. So Todd, do you want to….

Yes, the run rate – operating rate out out of the methanol unit has exceeded original design capacity. So we’re pleased with that progress. So that’s contributing. We’re still a buyer, a net buyer. So that remains unchanged.

We are looking with our partner, looking at options in conjunction with the just announced reconfiguration and expansion in the U.S. for methanol options looking ahead. Nothing to say at this point. But that’s just a part of our ongoing work together with our partner, Mitsui. So we will look at options there.

And it could actually take the shape in two different phases. But more to come on that one. On your CO question, we were not integrated before. So we source CO from our partners there. Mark mentioned Linde, of course, as well as their product. The other new partner will be Praxair going forward, who’s constructing a unit as we speak.

So this is a step into integration through a very unique opportunity that presented itself as a part of the Linde-Praxair merger. It’s a small step forward but also complementary as we think about the longer-term plan for the expanded acetic acid footprint in Clear Lake. So it fits to that integration.

And methanol is good news so far and more to come on that as we investigate alternatives..

Great. Thank you guys..

The next question comes from John McNulty with BMO Capital Markets. Please go ahead..

Yes, thanks for taking my questions. With regard to the acetyl expansion and the economics on it, it looks like it’s pretty compelling.

At the same time, should we be reading anything into the need to necessarily close in the Asian capacity with regard to how you’re thinking about the long-term growth in that region, et cetera, because it’s certainly an area that you’ve been growing out historically versus cutting out capacity?.

No, I think this is a reconfiguring. It doesn’t forgo – it doesn’t imply anything in terms of our beliefs around growth in Asia, if that makes sense. It’s a way that from an aesthetic sense, you can reconfigure and give yourself more optionality. And yes, so we remain very bullish on Asia.

And we remain bullish with our option needs with the assets we have there and other assets we’re going to put there in the future. So I don’t – I wouldn’t look at it that way at all, John. It’s simply a step-change to up our base level of earnings in the company and give ourselves more optionality in the future..

Got it. And then just a question on the longer-term outlook for – in China in particular around some of the environmental issues. I know that was – it’s been a hot topic certainly last year. It seems to have cooled off a little bit.

But are you starting to hear anything? Or are there any changes in terms of how to think about some of the potential capacity closures as we look to kind of 2019 and beyond?.

Yes, it’s – and we keep track of this continuously. The earlier policy, I guess, reveals or updates that came out of Shandong and Yunnan provinces, we’re studying those. We don’t see a direct impact into the acetyl business so far in terms of specific units that would need to come out.

There’s actually one band unit on Linde province that we think that’s got a circle around it that might be removed. That’s about a 100,000 ton unit. We just saw some news come out from Hubei province. And this is in conjunction with the Yangtze River changes, so the proximity to the river.

So Hubei province issued chemical plant relocation list, I think, on December 13. And there’s like 480 plants that are mentioned there that are on the list for review. And so it continues. And it’s a real, real subject. It continues to be drawn out. And information published from respective provinces, we look at those.

And as we see direct line to specific operating units, we will update as we go..

Great. Thanks for the color..

The next question comes from P.J. Juvekar with Citi. Please go ahead..

Yes, hi, good morning. Hey Mark, you go in detail to describe how MTO production, how it connects C1 and C2 chemistry and the impact in China. And you were able to increase your acetyl spreads over methanol.

I’m wondering, did you flex down your production in China or Singapore to do that? And if not, what exactly did you do to increase your margins?.

Well, I think really what it’s just – and maybe I’ve spent too much time on that in the written script. But I want people to understand how the economics work. But I also want to make a point that as you – from a legacy point of view, there certainly was a strong tie between methanol price in China and acetic acid price in China.

As you go up in capacity utilization, that starts to diminish. And you start to see it break away. And then as you look at the global optionality that we have and the way that Todd Elliott and company have run this business globally, we’re able to find ways to further disconnect those two things.

So a lot of independent actions rather than disconnect, including buying and reselling, including how we operate our units around the world. So I wouldn’t read anything special in that. I look at what exactly we did for that. We did the same thing we always do, which is drive optionality to create the most value for our shareholders..

Okay. And then secondly, Mark, you guide that Celanese has really good read into China with your business intelligence there. And you say that weakness was due to geopolitical issues and not fundamental.

So in your mind, at what point do the geopolitical issues become fundamental issues? Do you care to comment on that?.

Well, I don’t know how to quite answer that question. I guess, when you go through a period of growth like the world has gone through the last several years, and certainly Celanese has gone through the last years, you develop a behavior mechanism. And so that behavior is that you covet inventory.

You do things like that because the world is kind of on fire. And if somebody says to the crowd, to the masses, say, not so fast, pump the breaks, the brakes get pumped. And when that happens, you have a ripple effect that rolls through. And that ripple effect has a lasting feeling to it, a lasting feeling being three, four or five months.

But it’s kind of the stack-up of inventories, the production planning process, delivery cycle all gets interrupted. And that’s kind of what we’re in today. So I think when I say when you pump the brakes, what does it mean? It means a couple of quarters of this stuff is kind of what it means.

Just because of the – again, the lag time of cycles that you get into. So I think the geopolitical pressure has happened several of those cycles but really just set into some – like a large order or something like that. It takes a lot more than that really to drive our country and our economy into negative growth levels.

So our view is that this has been just a pump the brakes brought on by different levels of anxiety. People in China are quite concerned about the – they’re quite concerned about the relationship with the U.S. They’re not so concerned about trade. They think that’s just an indication of our relationship.

So our relationship with China needs to get better. And I see a lot of signs that, that’s starting to happen in spite of some of the political and legal actions that are underway today. I mean, I think fundamentally, it’s a little bit better. And hopefully, the trade this week will add to that.

In the case of Europe, I think it’s a little bit more – it’s more of a question of what’s going on with – in trade relative to the EU and Britain. Because we just don’t know the uncertainty level to that ripple effect of that and whether it’s going to have a bigger play throughout Europe. So my belief is we pump the brakes for a couple of months.

I don’t think which is how long economy oil price to drop. I don’t think – I think we’ll see ourselves sort of come out of that. There’s no reason fundamentally for it to change. In our way, it stays likely as if the political situation gets worse versus getting better. I think it’s going to get better..

Great. Thank you for the detail..

The next question comes from John Roberts with UBS. Please go ahead..

Thank you. In cig tow, you continue to take kind of tactical actions to improve the business, like the shutdown in Mexico.

Are there any strategic actions still on the table that you’re thinking about in cig tow over time?.

There are. And we’re having trouble making those happen just yet. But we’re working – we continue to work those. And I think it’s only, John, a matter of time before something surfaces there because it’s such an obvious need on the part of not only the producers but also the customers out there that still want very reliable supply and expect it to.

No one’s asked a question on tow relative to the quarter. And we talked a little bit in the quarter, which really was related to fixed costs rolling through that were very unusual for us. And we should have done a very good job of anticipating to communicate to The Street, which we did not.

And we also missed several orders, we just logistically couldn’t get them out. Those things – certainly, if the orders reverse themselves, we would expect feedback in the mid-60s as we get into the first quarter..

And then on the supply chain correction in the Engineered Materials segment, do you have any primary data on where your customers’ inventories are or how much contained plastics are down the supply chain? Or are you just basically triangulating between what you’re seeing in market data about end market growth versus what you’re selling into the channel?.

We did a bit more triangulating today. I think my comments on this year’s earnings really relate to kind of a view that we have a very high level of what’s going to happen. And we’ll be able to update that more in April..

Hey, Jerry. We will make the next question be the final question..

And that question will be from Kevin McCarthy with Vertical Research Partners. Please go ahead..

Yes, good morning.

With regard to your acetyl rationalization plans in Asia, Mark, could you comment as to whether you’re dismantling capacity in either China or Singapore? I’m trying to get a feel for whether you’re rationalizing capacity or production plans or both?.

Well, the way we’ve – to answer your question, we’re not fully committed to any one site to make that happen just yet. There’s options in value, different values slightly, depending on which way we go with that. Our intention is if we rationalize capacity, it’s rationalized. So that means it’s not available..

Okay.

And then with regard to the syngas plant acquisition, what impact would you expect that to have on your acetic acid margins or your segment margins? And could you comment on what happens with the hydrogen coming out of that unit, whether or not you need any internally or wheel it back to a gas supplier?.

Yes, I think the marginal impact is – it’s actually a return on capital impact is where you get it because you’re avoiding a capital investment. And then on a variable cost basis, it’s the same going in there. And I haven’t really sat down and worked through the actual return you get.

But you see it in lower levels of invested capital on return on that capital to produce the acetic acid. That’s how you’re going to see it. I don’t know if you want to take….

It fits, Kevin, with the expanded footprint, right? When we think of the three sources that we’ll have, it fits there and creates a wide range of operating rate flexibility, much more than we have today when you think about our Asian footprint.

So it fits with integration, it fits with future times and therefore requirement for CO and then operating rate flexibility, which we like as a part of our network process as we consider different decisions. And then the hydrogen reference, we do not have the need for it internally.

That would be packaged up in an arrangement with an industrial gas supplier or partner..

Thank you very much..

Okay, great. Thanks, everyone, for the questions today and for listening in. We’re available today after the call for any further concerns or questions you have..

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