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Greetings, and welcome to the Celanese Q1 2026 Earnings Call and webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the brief remarks. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now turn the conference over to Bill Cunningham. Thank you, Bill. You may begin.

Thanks, Darryl. Welcome to the Celanese Corporation first quarter 2026 earnings conference call. My name is Bill Cunningham, Vice President of Investor Relations. With me today on the call are Scott Richardson, President and Chief Executive Officer, and Chuck Kyrish, Chief Financial Officer. Celanese distributed its first quarter earnings release via Business Wire and posted prepared comments as well as a presentation on our investor relations website yesterday afternoon.

As a reminder, we'll 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 both the press release and the prepared comments. Form 8-K reports containing all of these materials have also been submitted to the SEC.

With that, Darryl, let's go ahead and open it up for questions.

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit yourself to 1 question and 1 follow-up question. Our first questions come from the line of Ghansham Panjabi with Baird. Please proceed with your questions.

Thank you, operator. Good morning, everybody. You know, I guess first off, based on your first quarter operating results, it seems like your major end markets are basically weak apart from some order pattern distortions specific to pre-buys, et cetera. As it relates to your guidance for the back half of the year, are you basically assuming that the operating environment reverts back to what you were seeing pre-war? I guess I'm referring specifically to the $3 per share in EPS you're guiding towards for the back half of the year.

Yeah, thanks for the question, Ghansham. You know, I think, you know, we've been pretty consistent with where our focus is, it really remains on, you know, cash generation, while we position our businesses for, you know, long-term success. That's because we're in a world where demand continues to be low at an end-use level. Certainly with some of the supply chain disruption that we're seeing here in the second quarter, you know, we're gonna go capture that. We are really building, you know, something that we believe is very resilient as we go forward.

As we look to the second half, you know, we ran a lot of different scenarios and, you know, as we look at the scenario, we do believe, you know, the right one to assume in the second half is one where, you know, supply chains start to unwind here by the end of the quarter, here in Q2, and you see that kind of moderate on where volumes and margins are in the second half. We just believe that's the right assumption at this point.

Okay. Thanks for that, Scott. As it relates to, you know, some of the network moves you've made in terms of ramping up capacity in certain cases in Frankfurt, et cetera, VAM, you know, VAE, and so on and so forth, what happens in the scenario that demand normalizes? Would you adjust accordingly? You know, given that you're ramping up this capacity again, obviously based on surge demand, et cetera.

Yeah. The words we use internally, Ghansham, are being positioned to respond, and that's not just here in Q2. This is how we operate every single day. You know, we've run Frankfurt, we've run Singapore as swing units, but we also, you know, swing our operating rates in the Acetyl Chain as needed. We pivot our supply chain and Engineered Materials, you know, as customer demand shifts and changes. We're gonna continue to position the company and the day-to-day business where it needs to be to respond. You know, if demand, you know, continues to stay where it is, you know, we've got the assets running where they are. If demand changes, we'll pivot as needed.

Okay. Perfect. Thank you for that, Scott.

Thank you. Our next question has come from the line of Patrick Cunningham with Citi. Please proceed with your questions.

Hi. Good morning. You know, your U.S. production at Clear Lake has a pretty significant advantage. I guess, you know, how have operating rates trended in the first quarter? You know, how are they, you know, progressing into 2Q? I'm just curious if there are any limiting factors to maximizing those rates or any logistics bottlenecks you foresee across the complex.

Yeah. Thanks, Patrick. It really is about reliability of supply for our customers. You know, Clear Lake is a great asset that can flex, you know, really across the products that we make there. Then we've got downstream assets positioned around the world that can also flex. As I just mentioned on the previous question, you know, Frankfurt is one of those assets that, you know, we block operated in a way that can flex as needed. We're gonna continue to adjust those rates as needed. As you can imagine, just given where, you know, some of the supply chain challenges have been this quarter, you know, Clear Lake is running at a relatively high utilization rate.

Got it. Then just on EM, can you talk a little bit about the playbook, you know, in sort of response or in context of the crisis in terms of pricing, share gain opportunities? You know, how has the Nylon 6,6 market performed? You know, any meaningful change in supply or trade flow dynamics at this point?

Yeah, look, how we look at our EM business is these are the right products, at the right time to drive growth in a world that is, you know, challenged for growth. We do that, by ensuring that we've got the right segment focus and then kind of drill down below that into a sub-segment focus. We are extremely well-positioned with the asset base, from a compounding, standpoint, which is where, you know, we create the most values in that last step of the process. Our assets are extremely well-positioned in each region. We are able to move polymer or buy polymer, in each region to be able to, you know, adjust as, you know, certain products may have scarcity because of supply chain challenges.

You know, or be able to, you know, adjust pricing, to deal with, you know, rising feedstock costs. It does tend to take a quarter or two for those feedstocks to really fully flow through in the Engineered Materials business. It was important that we work to try to get ahead of that from a pricing standpoint now.

Thank you. Our next question is coming from the line of Jeffrey Zekauskas with JPMorgan. Please proceed with your questions.

Thanks very much. Can you talk about the prospects for Ibn Sina and how that will affect your Engineered Materials, EBIT or EBITDA or equity income?

Yeah, thanks, Jeff. When you look at Ibn Sina, in 2025, they actually had a fairly large turnaround, so earnings were a little bit lower last year. Right now, as we estimate, earnings, 2026 versus 2025, we're assuming pretty much flattish, Jeff, on what rolls through equity earnings right now. Now the plant— Most of the assets there, have not been operating for the last six weeks or so because of shipping constraints as well as raw material feedstock disruption. You'll have to see kind of where that goes here into the second half.

Given the fact that we are on a 1-quarter lag there, you know, and the fact that 2025 was a pretty low number, you know, we're right now assuming flattish.

Okay, great. In the acetyl chain, in the second quarter, you're going to make maybe a little less than $200 million more. Can you analyze that in terms of, is it more acetic acid? Is it more VAM? Is it more China? Is it more U.S. exports? Can you give us an idea of how that improvement in the acetyl chain flows?

Yeah. I would say it's not really dissimilar to kind of fundamentally how the business operates, you know, in most quarters. You know, the majority of the profit, as we've said in the past, comes from the Western Hemisphere. I think the lift here from Q1 to Q2 is definitely weighted heavier towards the Western Hemisphere as well. It's that, you know, low-cost advantage that we have in our asset base in Clear Lake and being able to utilize that, you know, across the Western world. We have seen, you know, margins move up in Asia as well. I would say, you know, from a product standpoint, Jeff, very much disproportionate to the vinyl chain. Think VAM downstream into vinyl emulsions and then redispersible powder.

Again, not dissimilar to how we've talked about the business to being, a lot of the profitability coming less from selling acetic acid as acetic acid, but really monetizing downstream, and then seeing pockets of growth opportunity. We've talked over the last year or so about the importance of vinyl emulsions as well as powders kind of being a very small pocket of growth in certain parts of the world, and we're definitely seeing that right now. Vinyls chemistry has a nice advantage in a higher oil environment over competing systems. We're seeing and working with customers on growth opportunities to drive some switching as well. That's really where that focus is much more downstream in the product portfolio.

Great. Thank you very much.

Thank you. Our next question has come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your questions.

Thank you and good morning. Wanted to ask on the second half in EM, there's some comments in the prepared remarks about, you know, what you're doing on the nylon side of the equation, that you expect some inventory drawdowns and some structural inventory reductions that are already underway. Is that coming on the customer side of the equation? And you think that's gonna accelerate because you're gonna be reducing capacity? If you could just color in some of those lines for us, that'd be helpful.

Yeah. Hey, Vincent. In the second half, in engineered materials, we would expect an additional, you know, $50 million of absorption hit on the income statement. That is from drawing that nylon from the transition. We've had, as you know, some other structural inventory reduction actions underway, right? I would say even with all that, we are targeting to grow EM this year, which will more than offset, you know, these absorption hits over the year, which is about $35 million. The turnaround expense, which is about $15 million here coming in Q2. You know, potential raw material cost pressures that Scott talked about or even demand pullback.

Also offsetting the Micromax earnings, right? You know, at the same time, I think it's important to remember we're also fortifying the base in EM. You know, reducing costs, reducing complexity, taking this inventory, you know, permanently out of the system. It's really, you know, it's really been in the plan and in place, you know, for some time.

Okay. If I could just follow up on the acetyl chain. I don't think I saw this in prepared remarks. Does the second half assume that you're still running Frankfurt for the full second half, or does it assume some reduction in operations there?

Yeah, Vincent, there's different scenarios that could potentially play out. We are assuming that Frankfurt's gonna operate into the second half at this point. We do have some turnaround activity in 2 of our VAM units around the world. We've got both the U.S. VAM units in turnaround, you know, between now and the end of the year. Just depending on where demand is at will determine, you know, what that Frankfurt operating rate schedule will look like. But certainly, the expectation is that it's gonna operate into the second half.

Thank you very much.

Thank you. Our next question has come from the line of Michael Sison with Wells Fargo. Please proceed with your questions.

Hey, guys. Nice start to the year. In terms of the second half, just curious, if nothing really changes in, you know, in terms of the conflict here, does the run rate in 2Q for Acetyls kind of mirror third quarter? Meaning does third quarter look like second quarter, and then you sort of have a bigger drop in the fourth to get to your $3? Or are you assuming things get better and we're kind of $1.50, $1.50?

Yeah, let me, let me hit, you know, kind of a high level there, Mike, and then I'll turn it to Chuck to talk about kind of the cadence. You know, as we look at the second half guide, it was really kind of looking at a scenario where, you know, we start to see some of the unwinding of the supply chains here by the end of Q2, and then kind of continuing into the third quarter and then into the fourth quarter. You know, your question is, if we see things kind of stay, you know, where they are, you know, I would look at how we think about our business. I mentioned that position to respond earlier. It's kind of like a coiled spring. If the opportunity is there, then we're gonna release that spring.

You know, if things stay where they are, you know, from a, from a demand and a supply chain standpoint, then there's certainly upside in the, in the second half.

Yeah, Mike, yeah, based on the guide, look, there's a lot of moving parts and a lot of uncertainty. I think probably the easiest way to think about it right now is if you look at normal seasonality in any given year, you know, Q3 versus Q4, it's about $25 million-$30 million in each business. I think for now, that's a pretty good place to start. You know, I wouldn't be surprised to see, you know, similar pattern this year.

Got it. Just to follow up on Clear Lake. I recall, you know, Clear Lake 2 was running full out or running pretty high. Is Clear Lake 1 now sort of ramped fully up to sort of take advantage of the higher pricing and such? Where are industry margins now relative to, you know, the past peaks?

Yeah, Mike, let me answer your last question first. you know, certainly, we are nowhere near kind of what would be past peak demand levels globally or mid-cycle demand levels globally. I would not necessarily compare that to, you know, past periods from a margin or a volume perspective. you know, in terms of your first question, I would go back to the answer to Jeff's question, is the majority of, you know, the opportunities that we're seeing are more downstream from acetic acid in, you know, the vinyls chain.

You know, as we look at Clear Lake operating rates, you know, we've got, you know, both of those assets that we have there, kind of dialed in at the right level, to get the optimal usage, et cetera, and efficiency that we want from both assets and being able to pivot up or down as needed. Really it's more of a downstream opportunity that we're seeing as opposed to, you know, fundamental acetic acid demand.

Okay. Thank you.

Thank you. Our next question has come from the line of David Begleiter with Deutsche Bank. Please proceed with your questions.

Thank you. Good morning. Scott, some of your peers have talked about 9 to 12 months until supply chains normalize post the end to the conflict. Looks like you're targeting maybe a shorter timeline, sorry, to normalization acetyls. Can you talk to that timeline you're looking at? Thank you.

Yeah. Thanks, David. Look, it's about scenario planning, and there's a lot of different, you know, scenarios that could play out. You know, as you kind of look at, you know, the assumptions that we've made here that, you know, things begin to unwind, and that unwinding, it depends on what that kind of decline curve looks like in terms of volume and price based upon, you know, the speed of that unwinding. I think that is uncertain right now. We felt like it was important to be prudent in terms of how things could play out, because there's also a potential offset to demand. With feedstock prices high and where they are, you know, there could be an impact to underlying demand.

You know, we kind of put all those things out there, and again, you know, felt like it was the prudent, you know, guide for the second half. Also, as I said earlier, you know, look, we are ready. Our team has done a great job of responding to the environment here in the second quarter. If we see that environment continue, then we'll go capture that upside.

Very good. Just on EM, you've announced some price increases. What's the cadence of price cost as we go through Q2? Are you ahead, behind, or neutral? How does it go into the back half of the year? Thank you.

Yeah, we're starting to get some of that price flowing through. You know, as it is a kind of a slow uptick here in the second quarter, but it's important that, you know, we really begin to achieve that because the cost, while flowing through a little bit here in Q2, is gonna hit us heavier in Q3. I think we should see that, you know, hopefully fully materialize in the P&L in the third quarter. It's important, you know, as we exit Q2, that we're achieving the maximum amount of that price. We're certainly on the trajectory there. But, you know, the next six weeks here as we finish the quarter are gonna be really important in that equation.

Thank you.

Thank you. Our next question has come from the line of Frank Mitsch with Fermium Research. Please proceed with your questions.

Terrific. Thank you. Actually David's question leads nicely into what I wanted to ask about, and that's on the acetyl side of things. I mean, as you look at the second quarter, my assumption, and please correct me, and expand upon it, is that, you know, you're raising price in the acetyls, upstream and downstream. The expectation would be that you're gonna end the second quarter at a higher price level than what the 2Q average would be such that we're gonna start 3Q at a higher level. I mean, so a couple questions. Is that how you're thinking about it as well? You know, based on your prudent guidance, are you factoring some measure of price degradation in the third quarter?

How do you think about, you know, the price balance on acetyls and how we're going to enter the second half?

Yeah, Frank, I don't know on a global basis that that necessarily is the right assumption. You know, we've already seen pricing in China start to moderate, you know, as from where it was in at the beginning of April. Actually, I don't think on a global basis that's actually kind of the case of where things will be. I think, you know, we'll probably see that price in Asia stay where it is or possibly moderate a little more as we work our way through the quarter. In the Western Hemisphere, you know, where pricing is now is probably similar to where it will be at the end of the quarter, you know, depending on where, you know, competitive dynamics are.

I actually think, you know, where we were in April was probably the higher watermark, just as we look at the cadence today.

I understand what you're saying about China. My understanding is that some of that was also demand destruction. So they actually don't have, you know, you can't sell the products downstream, at least here in the near term. In the Western world, would you assume that, you know, in North America, that you would give back something on price in the third quarter?

I think it's TBD, Frank. I think, you know, I think we've got a moderation of margins in price as you work your way through the third quarter. Just from a normal seasonality standpoint, Q2 tends to be the highest quarter from a volumetric perspective, typically in acetyl. You know, you would normally have, you know, some volume, you know, come off in Q3 from a seasonality perspective through the holiday period. You know, we've kind of factored, you know, some of that into the assumptions for Q3.

Thank you so much, Scott. Appreciate it.

Thank you. Our next question has come from the line of Hassan Ahmed with Alembic Global Advisors. Please proceed with your questions.

Morning, Scott. You know, just wanted to sort of dig a little deeper about this uneven sort of pricing dynamic regionally that you guys talked about within Acetyls. I mean, my understanding is that, you know, as I take a look at the raw material side of things, you know, just in the Middle East alone, there seems to be 26 million to 27 million tons of methanol capacity that is offline, right? Obviously, methanol pricing across the globe has risen quite rapidly, including China, right? I'm just trying to understand this recent dip that we've seen, particularly in Chinese spot acetic pricing. You know, where are the margins there? Are operating rates still relatively elevated? Just trying to sort of make sense of this uneven sort of pricing environment by region.

Yeah, Hassan, I think now is a good time to really call out the decisive actions that our team in Acetyls has taken around the world in the quarter. They responded really quickly at the end of Q1 in order to take advantage of, you know, the margins started to move up there in China in particular, and that's really the only place that we saw, you know, benefit from some of the supply chain disruption in Q1, but they were really working to position for the second quarter. As we kind of look at it, you know, your margins were highest probably here in Q2 in China at the very beginning of the quarter, and they've come off.

We're certainly not at margin levels where they were at the beginning of 2026. You're kind of in between that, you know, where they were at the beginning of April and where they were when we started the year. It's somewhere in that zone. You know, we did see, you know, China was in holiday last week, came back today. Pricing did move up a little bit, so we're gonna have to kind of see how that holds and where demand is. Demand has held relatively steady from what we can tell, you know, through the value chain in China.

Very helpful, Scott. As a follow-up, can you just give us an update on where you guys stand with regards to any further potential divestitures?

Yeah, Hassan. Yeah, we continue to work that, you know, very aggressively. I would say, you know, the current events haven't helped the M&A market. Regardless, we do feel good about signing another deal this year. It could be a smaller deal, but we're working hard to get one signed. We have not baked in any assumption for cash proceeds from a deal, just from the uncertainty of, you know, kind of, signing versus closing.

Very helpful. Thank you so much.

Thank you. Our next question is coming from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Yeah. Thank you, and good morning. Scott, can you speak to your mix of contract versus spot business within acetyls on a pre-war basis? Speak to how that is evolving, if it's changing at all, post-war. You know, for example, you know, if you consider VAM and some of the parabolic price action there, is your philosophy to sort of strike while the iron is hot and take advantage of this windfall opportunity, you might say? Is it to really focus on upgrading your contracts and the terms and the mix, you know, with an eye toward the medium to longer term or some balance of those? Maybe you can just kind of talk through that and how you're thinking about it.

Yeah. Let me just kind of step back a minute, Kevin. You know, our team is first focused on being the most reliable supplier in each region in each product. You know, I think we've developed a network pretty deliberately for over many years that can achieve this and give us flex to be able to respond to what happens and what kind of landscape changes happen. You know, the pricing mechanisms that we have are different in each region, in each product, to be honest. You know, we've got some formula pricing in certain regions, particularly VAM in the U.S. that we've talked about. It kind of moves with raw materials, gives us a nice base, gives us cost pass-through.

We've got a lot more, you know, contracted business in Asia, but moves with how the market is moving, you know, very quickly. We've got blends in the, in the balance of the business in the U.S. and in Europe on different mechanisms. This is about being ready in an environment like we are now. Being able to flex with some extra volume, you know, gives us that ability to, you know, be that reliable supplier for customers and for new customers that, you know, are just coming to Celanese or just coming back to Celanese. It is about how do we get that business secured, you know, longer term. We are securing business that we didn't have under agreement for the second half.

You know, as that process works here in the second quarter, you know, give us better clarity on what the third and fourth quarter are going to look like as we are able to utilize this flex capacity that we have.

Thank you for that. Then, secondly, I wanted to ask about your new strategic initiatives in nylon that you announced last night in the U.S. and Singapore. I think you're targeting incremental cost savings of $30 million. Maybe you can step through what you're doing there and comment on, you know, the cash cost to achieve those savings and, you know, the timing of the flow-through of the $30 million in coming quarters or years.

Yeah. Let me hit kind of the, the philosophy, and the strategy around the changes, Kevin, and then I'll turn it to Chuck to talk about some of the details. You know, when it comes to Nylon 6,6, we've been very open about this now for, you know, more than a year. As we said in the past, you know, our value is in the compounding step of the process, and that's not changing here. In fact, we're enhancing, you know, our compounding capabilities in our specialty products where we need to ensure the reliability, of supply to our customers. You know, we've had a very thoughtful step plan to ensure, you know, the short and long-term sustainability, you know, of how we get polymer.

Being able to optimize this make versus buy on polymer is critically important. These announcements around polymer capacity for us is really the next big wave of that commitment to improving the fundamental profitability of the Nylon 6,6 business, and we believe these are the right moves for us right now. I think as we go forward, we would expect about $30 million of savings, as you mentioned. About a third of that will probably hit here in the second half of the year. I'll turn to Chuck to talk about the other details.

Thanks. Thanks, Kevin. Yeah, yeah. Like Scott said, about a third of that $30 million starts rolling in this year. Your question on the cash costs, think about that as sort of less than a 1-year payback of that, of that $30 million. That's been in our free cash flow forecast this year. Nothing incremental there.

Thanks so much.

Thank you. Our next question has come from the line of Laurence Alexander with Jefferies. Please proceed with your questions.

Good morning. Just wanted to flesh out how you're thinking on working capital, how much you think in your base case working capital will be a use of cash for this year. As you think about this year and next year, is working capital just ebbing and flowing with your expectations around input costs, or is there gonna be some net drag on EBITDA at some point to reduce your working capital position?

Thanks, Laurence. you know, let me talk about free cash flow this year and sort of talk about working capital within that. You know, if you look at our midpoint of our earnings guide, that's about a $few hundred million of EBITDA growth this year. That will translate into free cash flow, but it is likely that it'll be split between 2026 and 2027 as it works its way through working capital. Right now, to simplify, we're assuming we collect about half of that increased EBITDA this year and half next year. That would mean about half of that gets, you know, tied up in working capital.

I think before that, we were assuming, you know, this year actually, that working capital would be a source of cash of, say, call it $100 million as we continue to reduce inventory in EM. Maybe working capital in this scenario is closer to flat for the year. I think you kinda ebb and flow with demand. We do expect to continue to take inventory out of the system, you know, and generate, you know, tailwinds in working capital.

Thank you.

Thank you. Our next question has come from the line of John McNulty with BMO. Please proceed with your questions.

Yeah, good morning. Thanks for taking my question. On EM, with all of the work that you've been doing, and I guess some incremental work even this year, I guess, Maybe this year is not necessarily a normal year, I guess. Is there a way to think about what you think the mid-cycle earnings power of the business is now, just given, you know, given all the changes that you're completing and also maybe a more normalized demand environment?

Yeah. Thanks, John. You know, the words that we used in the prepared comments, I think are important to think about here. It's really about growth and Fortify. As we think about the Fortify piece, I mean, that's, you know, we've been working that hard with the cost reduction actions that we've taken out, the efficiency that we've been able to drive, how we're adding technology to the business with our Chemille platform. We are strengthening this business and positioning it to be able to ready to respond to customer needs. The other thing that the team has been working really hard on is kinda building a really deep segment approach focused on where we can win and where we can hold that business.

Where we have a differentiated offering, in growth sub-segments, in things like medical, electronics, data centers, some key growth industrial applications, high performance, athletic wear. There's just a lot of really great work the team's been doing in these high growth areas. Positioning well there, building the pipeline so that we can hit that growth piece going forward. Look, growth is always hard. Growth is even harder when the world around you isn't growing broadly. There are pockets of growth here, that's really where that focus is. It's hard to say, you know, what mid-cycle will look like. We do not believe we're anywhere near mid-cycle demand in kind of our historical key end uses as well as, you know, some of these emerging growth areas.

As we work that, as we continue to build out what we think the addressable market space is there, we'll provide that color in the future.

Great. Thanks very much for the color.

Thank you. Our next question has come from the line of Matthew DeYoe with Bank of America. Please proceed with your questions.

Morning. To touch a little bit on this, right, you know, I think there's a desire amongst investors really, you know, sell side as well, to just get a better handle on, like, what EM is now, given just the kind of asset aggregation and enclosures and repolymerizations and closures. I get the core identity and thesis behind Fortify. Like, at the end of the day, what is an achievable, I don't know, I don't want to call it, like, mid-cycle because it's not necessarily a pure commodity business. What should the people or what should the market think about as, like, a, you know, reasonable expectation on profitability for this business under normal demand, normal kind of margin structure?

Yeah. Thanks, Matt. You know, there's a lot to unpack there. You know, what I would say is this is a business that is customer-focused, with an eye towards building unique solutions. It's a business that we've been working hard over the last three and a half years, to make sure that we're well-positioned in the environment that we're now in globally, with a lot of the competitive landscape that's changed to be able to win. It's a business that has unique capabilities. It has unique products, and it has a unique ability to be able to get polymer solutions to do just about anything.

We've got a great model that I think ensures that the things that we're working on are gonna drive the profitability and are worth the time and effort that it takes to work these, you know, solutions. I think what we've been able to do now is take a business that was performing, you know, on an EBITDA basis in the low teens now to one that's now consistently performing, you know, north of 20%. The idea is to keep moving that upward. Even if the world around us is not growing, we are focused on growth.

When you look at and kind of back into, you know, our assumptions for this year, you normalize out Micromax and the $40 million or so of EBITDA that comes out of that, you know, this is a business that's gonna grow year-over-year, even though its end markets are not growing. I think that's the way to think about. It's a business that should be able to grow like we did in the past, going back you know, 5, 10 years ago, at 5%-10% minimum on the EBITDA line, and a business that's consistently gonna find a way to be able to deal with whatever the global environment is.

If we see a normalization of demand back to mid-cycle, and it's hard to say what that looks like because the world's changed quite a bit, you know, then I think you also possibly get kind of a hockey stick lift on that at some point. It's about being consistent, it's about being ready, and it's about continuing to take the hard steps to ensure that we have the cost structure in place to be able to win in a very competitive landscape.

All right. Thank you for that. If I could just ask on the acetic side, right? Like, I've never really trusted some of the consultants when it came to U.S. acetic prices. To your point, you know, Asia's off-peak, and that would lead me to believe, like, absent another leg higher, it remains maybe a bit curiously below Western markets. How does that Well, first off, is that right? You know, again, I don't have confidence in the U.S. pricing I get. How does this sustain, and then how does weaker acid pricing not translate to weaker VAM or would that weaker acid back up into methanol? Like how possible is this just stays kind of relegated to one market? I would assume it's not, but, you know, Just wanna hear you opine on it.

Yeah. Matt, as you know, I'm old. I've been here at Celanese for 21 years.

You're not that old.

When I joined Celanese, what we now call Acetyl Chain business was an acetic acid business. Now it is an Acetyl Chain business. It's a business that doesn't rely on us just selling acetic acid in order to be successful. You know, back then, 20 years ago, over half of what we sold to an end customer in this business was acetic acid. That is very much not the case anymore. You know, some of the dynamics that you talked about, you know, we are very much less susceptible to those acetic acid movements. Yes, you are gonna see, you know, acetic acid pricing in some regions, you know, roll through into the downstream, but it usually takes some time, both on the way up and on the way down.

You know, it's about managing that, and it's also then continuing to position for the pockets of growth that are in this business. Yes, they've been small, but there have been pockets of growth for us in the vinyl emulsions part of the business as well as in redispersible powders. In the environment we're in now, you know, we're finding ways at which to expand that. As I mentioned earlier, with some of the switching that customers wanna do, away from oil-based systems, you know, this is giving us a nice advantage and the opportunity is now for us to go get that business, get it contracted, and extend it into next year and beyond.

All right. Thanks, Scott.

Thank you. Our next question is coming from the line of John Roberts with Mizuho. Please proceed with your questions.

Thank you. This is Edwin Rodriguez for John. Good morning, everyone. A quick one, Scott. In this inflationary environment, like, how concerned are you about demand disruption in the latter parts of the year? Related to that, are you seeing any signs of pre-buying by customers that trying to get ahead of price increases that they're seeing coming?

Thanks for the question. Look, it's something that we're very much concerned about, and we're watching very closely. You know, it factors into, you know, the scenarios that we put out for the second half. And there's no doubt that's something that we are looking at, and we put it in our prepared comments that, you know, particularly in Engineered Materials, that, you know, we may be seeing a front-loading of some of that volume. That certainly factors into the guide that we made for the second half. I don't think we're seeing much of that in acetyls, to be honest with you. I mean, the products that we have there largely are liquid bulk chemicals. They have, you know, some element of shelf life as well as storage limitations around the world.

I don't think it's much of a factor there, but it's certainly something that we're cognizant of on the Engineered Materials side of the house.

Okay, perfect. That's all I have. Thank you.

Darryl, we'll make the next question our last one, please.

Thank you. Our final questions will come from the line of Joshua Spector with UBS. Please proceed with your questions.

Hi, good morning. It's Chris Perrella on for Josh. Can you size the POM turnaround impact in the second quarter there? Might have missed that earlier. Is the later restart dependent on the ability to get feed out of Evancina? Can you make the economics work buying methanol to feed the plant there? I guess the corollary is, are you seeing raw material sourcing issues particularly in Asia at this point?

Yeah, Chris, let me start and I'll let Chuck fill in the details. Let me hit the second part of your question first. No. We have already moved, and we are moving methanol from our plant in the United States over to Europe. You know, our POM unit in Europe, you know, either uses sourced methanol from the market or uses our own cost-based U.S. natural gas-based material.

Yeah. Let me talk about kinda what Q1 to Q2, both the turnaround and some of the other inventory. In Q1, we built POM inventory, hit the income statement, $25 million benefit in Q1. Now in Q2, we're gonna draw that POM inventory down, but we will build some nylon for the transitions that we've talked about. Expect a net, you know, $10 million absorption hit to the income statement in Q2, plus about $15 million of turnaround expense. As you know from the guide, we do expect to offset the majority of that $50 million sequential headwind, you know, through the volume improvement and pricing actions we've talked about.

Perfect. Thank you.

Well, thank you, everyone. We'd like to thank you for listening in today. As always, we're available after the call for any follow-up questions. Darryl, please go ahead and close out the call.

Ladies and gentlemen, thank you so much for your participation. This does conclude today's teleconference and webcast. Please disconnect your lines at this time, and have a wonderful day.