Celanese Corporation (CE)
Q4 2012 Earnings Call
January 29, 2013 10:00 am ET
Jon Puckett – Investor Relations
Mark C. Rohr – Chairman and Chief Executive Officer
Doug Madden – Chief Operating Officer
Christoper W. Jensen – Senior Vice President, Finance
Steven Sterin –Senior Vice President, Chief Financial Officer and President, Advanced Fuel Technologies Business
Kevin McCarthy – Bank of America-Merrill Lynch
Duffy Fischer – Barclays
Mike Ritzenthaler – Piper Jaffray
P.J. Juvekar – Citi
David Begleiter – Deutsche Bank
Laurence Alexander – Jefferies & Company
Jeff Zekauskas – JPMorgan Securities, Inc
Nils Wallin – CLSA
Frank Mitsch – Wells Fargo
Hassan Ahmed – Alembic Global Advisors
Robert Koort – Goldman Sachs
Vincent Andrews – Morgan Stanley
John Mcnulty – Credit Suisse
Good day, ladies and gentlemen, and welcome to the Celanese Corporation Q4 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded.
I would now like to discuss this conference call, Mr. Jon Puckett. You may begin sir.
Thanks, Kevin. And welcome to the Celanese Corporation fourth quarter 2012 conference call. My name is Jon Puckett. With me today are Mark Rohr, Chairman and Chief Executive Officer; Steven Sterin, Senior Vice President and Chief Financial Officer; Doug Madden, Chief Operating Officer; and Mark Oberle, Senior Vice President, Corporate Affairs.
The Celanese Corporation fourth quarter 2012 earnings release was distributed via Business Wire yesterday after market close. The slides for the call and our prepared comments for the quarter were also posted on our website www.celanese.com in the Investor section. All of these items have been submitted to the SEC in a current report on Form 8-K.
As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements concerning, for example, Celanese Corporation’s future objectives and results. Please note the cautionary language contained in the posted PowerPoint slides.
Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included in the posted slides or the press release as applicable.
This morning, Mark Rohr, will provide some introductory comments and then we will field your questions.
I’d now like to turn the call over to Mark.
Mark C. Rohr
Thanks, Jon, and welcome everyone to the call today. We released our prepared remarks last night so I’ll do a brief summary of the quarter before opening the line for questions.
For the quarter, we reported adjusted earnings per share of $0.67 on revenue of $1.5 billion. This represents the 16% adjusted earnings growth year-over-year on expanded operating EBITDA margins in three out of four businesses. We generated strong cash flow again this quarter and recorded our second highest operating cash flow of $722 million for the year. Adjusted free cash flow for the year was $339 million despite higher year-over-year capital spending on growth projects like ethanol. And this number also includes a $100 million of voluntary U.S. pension contribution. These results demonstrate the strength of our business, our technology platforms, and most importantly the capability of our teams around the world.
Looking forward to 2013, we expect the economic environment to remain uncertain. And as we said last quarter, we are not planning on global economic growth to help Celanese this year. To drive earnings growth in 2013, we will focus on Celanese-specific initiatives, like productivity, like our Acetate footprint rationalization, like the expansion at our Chinese facility in Nantong and like the planned start-up of ethanol production facility in Nanjing.
We also expect our efforts to increase the effectiveness and speed of new product introductions to help drive earnings growth this year. The slowdown in Asia and Europe will increase the percentage of earnings we realize in higher tax jurisdictions, particularly the U.S., increasing our 2013 forecasted adjusted tax rate by 200 basis points to 19%, or about 10% per share impact for 2013. Nonetheless, we continue to believe the positive effect of our actions will yield adjusted EPS growth between $0.45 and $0.50 in 2013.
Now, before we move to Q&A, I want to express my gratitude to our Chief Operating Officer, Doug Madden. Doug is going to retire at the end of March and he has been a critical part of the organization for the last 28 years. He has had multiple departments, divisions in our corporation. We have all benefitted from his knowledge about the industry and the world chemistry, and Doug has self transformed Celanese into customer focused business is today and he set the foundation for the innovative force it will become tomorrow. Doug, on behalf of the entire Celanese team, I want to thank you for your many contributions and wish you all the best in retirement.
With that, I’ll turn the call over to Jon for Q&A.
Thanks, Mark. Kevin, will you give the instructions and let me just remind folks that we'd ask you to have one question and one follow-up, and just we can get everybody’s question then.
(Operator Instructions) Our first question comes from Kevin McCarthy with Bank of America.
Kevin McCarthy – Bank of America-Merrill Lynch
Mark, could you provide an update on your discussions related to fuel ethanol in Indonesia and China please?
Mark C. Rohr
Yeah. Thanks, Kevin. We continue to work with Pertamina in Indonesia. We are nearing the end of the first phase of that study, and we're looking forward and I think we’ll be in a position for too long to announce moving into the second phase for that project. If you look at that project under a big perspective, fuel ethanol in Indonesia really works well. We have abundant availability of low-cost coal. We have entered demand in that economy for clean fuel and the growing fuel demand is what imported fuel that can be offset in the results of subsidies that government pay.
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