Celanese Corporation (CE) on Q1 2022 Results - Earnings Call Transcript
Operator: Greetings and welcome to the Celanese's First Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder this conference is being recorded. I would now like to turn the call over to Brandon Ayache, Vice President of Investor Relations. Thank you. You may begin. Brandon Ayache: Thank you, Daryl. Welcome to the Celanese Corporation first quarter 2022 earnings conference call. My name is Brandon Ayache, Vice President of Investor Relations. And with me today on the call are Lori Ryerkerk, Chairman of the Board and Chief Executive Officer; and Scott Richardson, Chief Financial Officer. Celanese Corporation distributed its first quarter earnings release via Business Wire and posted prepared comments about the quarter on our Investor Relations website yesterday afternoon. As a reminder, we will discuss non-GAAP financial measures today. You can find definitions of these measures, as well as reconciliations to the comparable GAAP measures on our website. Today's presentation will also include forward-looking statements. Please review the cautionary language regarding forward-looking statements, which can be found at the end of the press release, as well as the prepared comments. Form 8-K reports containing all these materials have also been submitted to the SEC. Because we published our prepared comments yesterday, we'll now open the line directly for your questions. Daryl, please go ahead and open the line for questions. Operator: Thank you. We will now be conducting a question-and-answer session. Our first questions come from the line of Josh Spector with UBS. Please proceed with your questions. Josh Spector: Hi. Thanks for taking my question. I was just curious on the Engineered Materials' EBIT guidance. I was wondering what's baked in there in terms of volume sequentially. I mean, you're pretty clear about the auto pull-forward, but wonder if there's any other puts and takes around that, assuming you're getting incremental pricing, I assume, you're assuming some volume moderation for 2Q. And then similarly, for the rest of the year thinking about how you're kind of framing up volume expectations for auto end markets and otherwise. Thanks. Lori Ryerkerk: Yes. Thanks, Josh. As we look at full year, so if we look at 2021 to 2022 we are assuming some volume in there. Some of that is for Santoprene, but there's a couple of percent growth in base business as well. And that really comes about as we see improvements in 2022 versus 2021 and a lot -- the availability of a lot of our raw materials. So things like glass, fiber, things like flame retardants, even some resins that we called out last year. Now that we are getting better supplies of those, we're able to increase our volumes and that really accounts for the base volume increase. And as I said, we do have volume increase in there as well for Santoprene. I would say, we called out auto to be flat year-on-year, so we're not assuming a large increase in volume to auto, although, we do continue to see margin growth in materials into auto, as we continue to high-grade the materials we sell into auto. But I would say, really, strength across all sectors, all of them growing a little bit in that volume. Josh Spector: And then, I guess, just specifically on 2Q and that sequential volume move, are you thinking that volumes are up or down into 2Q, given some of the macro headwinds? Lori Ryerkerk: Yes. I think, in Q2, we're expecting a little less volume. Again, we called out that we had about, what we think, was $10 million to $15 million of volume pull forward from 2Q to 1Q. Again, I think, we called it out in our notes. Really, that was driven by demand being down in 1Q in terms of auto builds, but people wanting to go ahead and rebuild inventory. You might recall that, we had said, fourth quarter, we saw a lot of inventory reduction, as people went to end of the year. And so, we think people were just rebuilding inventory in 1Q. And unless we see a rapid demand, which we're not forecasting, for auto in 2Q, then we would expect to see that $10 million to $15 million not show up in the second quarter, if you will. Josh Spector: Okay Thank you. Operator: Thank you. Our next questions come from the line of P.J. Juvekar with Citi. Please proceed with your questions. P.J. Juvekar:
Celanese Corporation (NYSE:CE) Faces Market Challenges Despite Strong Performance
- Aleksey Yefremov from KeyBanc sets a new price target of $70 for Celanese Corporation (NYSE:CE), indicating a potential increase of 69.82%.
- Despite surpassing Wall Street expectations with an adjusted EPS of $1.44 and revenues of $2.53 billion, Celanese's stock declines due to a weaker-than-expected third-quarter forecast.
- The company's share price fell by 14.6% in extended trading after announcing a profit forecast below market expectations.
Celanese Corporation (NYSE:CE) is a global chemicals manufacturer known for producing a wide range of products, including acetyl products and engineered materials. The company operates in various markets, providing essential materials for industries such as automotive, consumer goods, and industrial applications. Celanese faces competition from other chemical giants like Dow Inc. and Eastman Chemical Company.
On August 13, 2025, Aleksey Yefremov from KeyBanc set a price target of $70 for Celanese, suggesting a potential increase of 69.82% from its current trading price of $41.22. This adjustment from a previous target of $77, as reported by TheFly, reflects a more cautious outlook amid recent market developments. Despite the optimistic target, Celanese's stock has faced challenges.
Celanese's stock experienced a significant decline following a weaker-than-expected third-quarter forecast. The company cited softening demand across most end markets, overshadowing its strong second-quarter performance. Despite surpassing Wall Street's expectations with adjusted EPS of $1.44 and revenues of $2.53 billion, the market reacted negatively to future demand concerns.
The company's second-quarter results showed a 4.5% revenue decline from the previous year, attributed to decreased pricing and volumes. Prices fell 4% year over year, but Celanese managed to offset demand softness through strategic cost cuts and a focus on cash flow. The company remains committed to its cost management strategies despite anticipating continued softer demand.
Celanese's recent profit forecast for the third quarter, which falls below market expectations, has led to a significant drop in its share price. The stock fell by 14.6% in extended trading, reflecting a decrease of 13.07% with a drop of $6.20. The company's market capitalization stands at approximately $4.51 billion, with a trading volume of 12.78 million shares on the NYSE.
Celanese Shares Drop 13% After Weak Q3 Outlook Overshadows Earnings Beat
Celanese Corporation (NYSE:CE) shares fell more than 13% intra-day after the global chemical and specialty materials producer issued a downbeat third-quarter forecast that outweighed stronger-than-expected second-quarter results.
The company reported adjusted earnings of $1.44 per share for the second quarter, topping analyst estimates of $1.40. Revenue came in at $2.53 billion, slightly ahead of the $2.5 billion consensus. However, investors reacted to Celanese’s third-quarter guidance of $1.10 to $1.40 per share, well below analyst expectations of $1.73.
The company cited weakening demand across most major end-markets in the second half of the year, with order books building at a slower pace than in the prior quarter. It also projected a sequential earnings headwind of approximately $25 million due to continued inventory reduction efforts.
Second-quarter revenue rose 6% from the prior quarter, supported by a 4% increase in volume and a 3% currency tailwind, partially offset by lower pricing. Compared with the same quarter last year, revenue declined 4.5% from $2.65 billion.
Despite the softer outlook, Celanese reaffirmed its expectation to generate $700 million to $800 million in free cash flow in 2025, highlighting its commitment to cash generation, cost control, and balance sheet deleveraging.
RBC Lifts Celanese Price Target, Cautious on Near-Term Auto Weakness Despite Improved 2025 Outlook
RBC Capital raised its price target on Celanese (NYSE:CE) to $63 from $53 while maintaining a Sector Perform rating, pointing to an improved outlook for fiscal 2025 but cautioning that persistent weakness in automotive builds could weigh on near-term results.
The analysts emphasized that Celanese’s Q2 performance will be key to gauging its success in managing inventories and positioning for stronger growth in the second half of the year. RBC is holding its estimates steady, projecting EPS of $1.33 for Q2, $4.97 for 2025, and $7.10 for 2026, along with EBITDA forecasts of $510 million, $1.975 billion, and $2.20 billion, respectively—figures that already factor in a recovery from Q1 lows.
However, the firm remains skeptical that Celanese can sustainably achieve its target of $2 EPS per quarter until it demonstrates meaningful volume improvements over the next few quarters. RBC’s updated price target reflects a modestly brighter medium-term outlook while acknowledging lingering headwinds that could limit near-term upside.
Evercore Trims Celanese Price Target to $75, Sees Tactical Upside Ahead of Q1 Print
Evercore ISI lowered its price target on Celanese (NYSE:CE) from $85 to $75, while maintaining an In Line rating, citing near-term opportunity despite medium-term headwinds.
Analysts noted that while macro risks like European auto tariffs and elevated natural gas prices pose challenges, these are unlikely to affect Celanese in the short-term window relevant to this tactical setup.
With first-quarter guidance issued well into the quarter and intra-quarter data showing encouraging signs, Evercore sees the downside as relatively contained. The firm also emphasized a lack of negative pre-announcements, which further supports a potential upside surprise when results are reported.
The call is driven by expectations that investor sentiment is near a trough, and that improving forward visibility, including second-half guidance and operational updates, could reignite interest in the stock.
Additionally, recent debt maturity extensions have eased concerns around leverage, giving Celanese more breathing room as it looks to stabilize operations.
Though the price target was reduced, Evercore views current levels as an attractive risk-reward entry point, particularly for investors looking to capitalize on a short-term rebound in sentiment and valuation.
Evercore Trims Celanese Price Target to $75, Sees Tactical Upside Ahead of Q1 Print
Evercore ISI lowered its price target on Celanese (NYSE:CE) from $85 to $75, while maintaining an In Line rating, citing near-term opportunity despite medium-term headwinds.
Analysts noted that while macro risks like European auto tariffs and elevated natural gas prices pose challenges, these are unlikely to affect Celanese in the short-term window relevant to this tactical setup.
With first-quarter guidance issued well into the quarter and intra-quarter data showing encouraging signs, Evercore sees the downside as relatively contained. The firm also emphasized a lack of negative pre-announcements, which further supports a potential upside surprise when results are reported.
The call is driven by expectations that investor sentiment is near a trough, and that improving forward visibility, including second-half guidance and operational updates, could reignite interest in the stock.
Additionally, recent debt maturity extensions have eased concerns around leverage, giving Celanese more breathing room as it looks to stabilize operations.
Though the price target was reduced, Evercore views current levels as an attractive risk-reward entry point, particularly for investors looking to capitalize on a short-term rebound in sentiment and valuation.
Celanese Corporation's Upcoming Earnings Report: A Financial Overview
- Wall Street analysts estimate Celanese's earnings per share (EPS) to be $1.25, with projected revenue of $2.36 billion.
- Analysts expect a decline in earnings for the quarter ended December 2024, with a consensus EPS estimate of $1.20.
- The company's financial health is highlighted by a price-to-earnings (P/E) ratio of 6.55 and a debt-to-equity ratio of 1.82.
Celanese Corporation (NYSE:CE) is a global chemical and specialty materials company. It produces a wide range of products used in industries such as automotive, consumer goods, and pharmaceuticals. As a key player in the chemical sector, Celanese competes with companies like Dow Inc. and Eastman Chemical Company. The company is set to release its quarterly earnings on February 18, 2025.
Wall Street analysts estimate Celanese's earnings per share (EPS) to be $1.25, with projected revenue of $2.36 billion. However, analysts expect a decline in earnings for the quarter ended December 2024, with a consensus EPS estimate of $1.20. This suggests a potential decrease in revenue compared to the previous year, as highlighted by the anticipated figures.
The upcoming earnings report could significantly impact Celanese's stock price. If the company surpasses the $1.20 EPS expectation, the stock might trend upward. Conversely, if results fall short, a decline could occur. The sustainability of any price changes will depend on management's discussion of business conditions during the earnings call.
Celanese's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 6.55, indicating how the market values its earnings. Its price-to-sales ratio is 0.68, suggesting the stock is valued at less than its annual sales. The enterprise value to sales ratio is 1.87, reflecting the company's total valuation relative to its sales.
The company's financial health is further illustrated by its debt-to-equity ratio of 1.82, showing its reliance on debt financing. The current ratio of 1.37 indicates Celanese's ability to cover short-term liabilities with short-term assets. These metrics, along with an earnings yield of 15.27%, provide a comprehensive view of Celanese's financial standing.
Celanese Corporation's Upcoming Earnings Report: A Financial Overview
- Wall Street analysts estimate Celanese's earnings per share (EPS) to be $1.25, with projected revenue of $2.36 billion.
- Analysts expect a decline in earnings for the quarter ended December 2024, with a consensus EPS estimate of $1.20.
- The company's financial health is highlighted by a price-to-earnings (P/E) ratio of 6.55 and a debt-to-equity ratio of 1.82.
Celanese Corporation (NYSE:CE) is a global chemical and specialty materials company. It produces a wide range of products used in industries such as automotive, consumer goods, and pharmaceuticals. As a key player in the chemical sector, Celanese competes with companies like Dow Inc. and Eastman Chemical Company. The company is set to release its quarterly earnings on February 18, 2025.
Wall Street analysts estimate Celanese's earnings per share (EPS) to be $1.25, with projected revenue of $2.36 billion. However, analysts expect a decline in earnings for the quarter ended December 2024, with a consensus EPS estimate of $1.20. This suggests a potential decrease in revenue compared to the previous year, as highlighted by the anticipated figures.
The upcoming earnings report could significantly impact Celanese's stock price. If the company surpasses the $1.20 EPS expectation, the stock might trend upward. Conversely, if results fall short, a decline could occur. The sustainability of any price changes will depend on management's discussion of business conditions during the earnings call.
Celanese's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of 6.55, indicating how the market values its earnings. Its price-to-sales ratio is 0.68, suggesting the stock is valued at less than its annual sales. The enterprise value to sales ratio is 1.87, reflecting the company's total valuation relative to its sales.
The company's financial health is further illustrated by its debt-to-equity ratio of 1.82, showing its reliance on debt financing. The current ratio of 1.37 indicates Celanese's ability to cover short-term liabilities with short-term assets. These metrics, along with an earnings yield of 15.27%, provide a comprehensive view of Celanese's financial standing.
