# Celanese Corp: Form 10-Q for the period ended Sep 30, 2022

- Company: [Celanese Corp](/companies/ce.md) (CIK 1306830)
- Form: 10-Q
- Filed: 2022-11-04
- Accepted by EDGAR: Nov 4, 2022, 20:17 ET
- Period: 2022-09-30
- Accession: 0001306830-22-000184
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1306830/000130683022000184/ce-20220930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1306830/000130683022000184/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $2.30bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-01-01 to 2022-09-30 | $7.33bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2022-07-01 to 2022-09-30 | $1.75bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2022-01-01 to 2022-09-30 | $5.33bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2022-07-01 to 2022-09-30 | $546.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-01-01 to 2022-09-30 | $2.00bn | us-gaap:GrossProfit |
| Research and development | 3 months, 2022-07-01 to 2022-09-30 | $25.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2022-01-01 to 2022-09-30 | $75.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2022-07-01 to 2022-09-30 | $184.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2022-01-01 to 2022-09-30 | $555.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $308.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-01-01 to 2022-09-30 | $1.32bn | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $154.0m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-01-01 to 2022-09-30 | $237.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $127.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-01-01 to 2022-09-30 | $351.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $191.0m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-01-01 to 2022-09-30 | $1.13bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.75 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-01-01 to 2022-09-30 | $10.32 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $1.76 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-01-01 to 2022-09-30 | $10.40 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 109,065,970 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-01-01 to 2022-09-30 | 109,158,832 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-01-01 to 2022-09-30 | $1.28bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-01-01 to 2022-09-30 | $400.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2022-01-01 to 2022-09-30 | $220.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2022-01-01 to 2022-09-30 | $17.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2022-09-30 | $13.19bn | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $21.34bn | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $2.79bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2022-09-30 | $11.36bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2022-09-30 | $977.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2022-09-30 | $4.95bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 62,629 characters.

*In this Quarterly Report on Form 10-Q ("Quarterly Report"), the term "Celanese" refers to Celanese Corporation, a Delaware corporation, and not its subsidiaries. The terms the "Company," "we," "our" and "us," refer to Celanese and its subsidiaries on a consolidated basis. The term "Celanese U.S." refers to the Company's subsidiary, Celanese US Holdings LLC, a Delaware limited liability company, and not its subsidiaries.*

*The following discussion should be read in conjunction with the Celanese Corporation and Subsidiaries consolidated financial statements as of and for the year ended December 31, 2021 filed on February 10, 2022 with the Securities and Exchange Commission ("SEC") as part of the Company's Annual Reporting on Form 10-K ("2021 Form 10-K") and the unaudited interim consolidated financial statements and notes to the unaudited interim consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").*

*Investors are cautioned that the forward-looking statements contained in this section and other parts of this Quarterly Report involve both risk and uncertainty. Several important factors could cause actual results to differ materially from those anticipated by these statements. Many of these statements are macroeconomic in nature and are, therefore, beyond the control of management. See "Forward-Looking Statements" below and at the beginning of our 2021 Form 10-K.*

### Forward-Looking Statements

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and other parts of this Quarterly Report contain certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. Generally, words such as "believe," "expect," "intend," "estimate," "anticipate," "project," "plan," "may," "can," "could," "might," and "will," and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views and beliefs with respect to future events at the time that the statements are made, are not historical facts or guarantees of future performance and involve risks and uncertainties that are difficult to predict and many of which are outside of our control. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. All forward-looking statements made in this Quarterly Report are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed in this Quarterly Report will increase with the passage of time. We undertake no obligation, and disclaim any duty, to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changes in our expectations or otherwise.

### Risk Factors

See *Part I - Item 1A. Risk Factors* of our 2021 Form 10-K for a description of certain risk factors that you should consider which could significantly affect our financial results. In addition, the following factors, among others, could cause our actual results to differ materially from those results, performance or achievements that may be expressed or implied by such forward-looking statements:

- changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate;
- volatility or changes in the price and availability of raw materials and energy, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources;
- the length and depth of product and industry business cycles particularly in the automotive, electrical, textiles, electronics and construction industries;
- the ability to pass increases in raw material prices, logistics costs and other costs on to customers or otherwise improve margins through price increases;
- the accuracy or inaccuracy of our beliefs or assumptions regarding anticipated benefits of the acquisition (the "M&M Acquisition") by us of the majority of the Mobility & Materials business (the "M&M Business") of DuPont de Nemours, Inc. ("DuPont"), including as a result of the performance of the M&M Business between signing and closing of the M&M Acquisition;
- the possibility that we will not be able to realize anticipated improvements in the M&M Business's financial performance – including optimizing pricing, currency mix and inventory – or realize the anticipated benefits of the M&M Acquisition, including synergies and growth opportunities, within the anticipated timeframe or at all, whether as a result of difficulties

arising from the operation or integration of the M&M Business or other unanticipated delays, costs, inefficiencies or liabilities;

- increased commercial, legal or regulatory complexity of entering into, or expanding our exposure to, certain end markets and geographies;
- risks in the global economy and equity and credit markets and their potential impact on our ability to pay down debt in the future and/or refinance at suitable rates, in a timely manner, or at all;
- diversion of management's attention from ongoing business operations and opportunities and other disruption caused by the M&M Acquisition and the integration processes and their impact on our existing business and relationships;
- risks and costs associated with increased leverage from the M&M Acquisition, including increased interest expense and potential reduction of business and strategic flexibility;
- the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance;
- the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants;
- increased price competition and the introduction of competing products by other companies;
- the ability to identify desirable potential acquisition targets and to complete and integrate acquisition or investment transactions, including obtaining regulatory approvals, consistent with our strategy;
- market acceptance of our technology;
- compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, transportation, logistics or supply chain disruptions, cybersecurity incidents, terrorism or political unrest, public health crises (including, but not limited to, the COVID-19 pandemic), or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war (such as the Russia-Ukraine conflict) or terrorist incidents or as a result of weather, natural disasters, or other crises;
- the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to us;
- changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not limited to, adjustments, changes in estimates or interpretations or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in the United States and other jurisdictions;
- changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property;
- potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change;
- the extent to which resurgences or variants of COVID-19 may adversely impact the economic environment, market demand, our operations, availability and cost of transportation and materials, the labor supply and pace of economic recovery;
- potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, or from changes in the laws, regulations or policies of governments or other governmental activities, in the countries in which we operate;
- changes in currency exchange rates and interest rates; and
- various other factors, both referenced and not referenced in this Quarterly Report.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. COVID-19 and responses to the pandemic by governments and businesses, have significantly increased financial, economic and cost volatility and uncertainty, exacerbating the risks and potential impact of these factors. Should one or more of these risks or uncertainties materialize, affect us in ways or to an extent that we currently do not expect or consider to be significant, or should underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from those described in this Quarterly Report as anticipated, believed, estimated, expected, intended, planned or projected. We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of their dates.

### Overview

We are a global chemical and specialty materials company. We are a leading global producer of high performance engineered polymers that are used in a variety of high-value applications, as well as one of the world's largest producers of acetyl products, which are intermediate chemicals, for nearly all major industries. As a recognized innovator in the chemicals industry, we engineer and manufacture a wide variety of products essential to everyday living. Our broad product portfolio serves a diverse set of end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives, consumer and medical, energy storage, filtration, food and beverage, paints and coatings, paper and packaging, performance industrial and textiles. Our products enjoy leading global positions due to our differentiated business models, large global production capacity, operating efficiencies, proprietary technology and competitive cost structures.

Our large and diverse global customer base primarily consists of major companies across a broad array of industries. We hold geographically balanced global positions and participate in diversified end-use applications. We combine a demonstrated track record of execution, strong performance built on differentiated business models and a clear focus on growth and value creation. Known for operational excellence, reliability and execution of our business strategies, we partner with our customers around the globe to deliver best-in-class technologies and solutions.

On February 17, 2022, we signed a definitive agreement to acquire a majority of the Mobility & Materials business of DuPont de Nemours, Inc. See Note 3 - Acquisitions, Dispositions and Plant Closures in the accompanying unaudited interim consolidated financial statements for further information. We closed on the M&M Acquisition on November 1, 2022. See Note 19 - Subsequent Events in the accompanying unaudited interim consolidated financial statements for further information.

### Results of Operations

#### Financial Highlights

*(unaudited)*

*(In $ millions, except percentages)*

| Statement of Operations Data | Three Months Ended September 30, 2022 | 2021 | Change | Nine Months Ended September 30, 2022 | 2021 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 2,301 | 2,266 | 35 | 7,325 | 6,262 | 1,063 |
| Gross profit | 546 | 715 | (169) | 1,996 | 1,961 | 35 |
| Selling, general and administrative ("SG&A") expenses | (184) | (165) | (19) | (555) | (463) | (92) |
| Other (charges) gains, net | (15) | — | (15) | (15) | 3 | (18) |
| Operating profit (loss) | 308 | 536 | (228) | 1,322 | 1,429 | (107) |
| Equity in net earnings (loss) of affiliates | 73 | 44 | 29 | 189 | 110 | 79 |
| Non-operating pension and other postretirement employee benefit (expense) income | 25 | 37 | (12) | 74 | 113 | (39) |
| Interest expense | (154) | (21) | (133) | (237) | (70) | (167) |
| Interest income | 34 | 2 | 32 | 36 | 7 | 29 |
| Dividend income - equity investments | 30 | 35 | (5) | 103 | 114 | (11) |
| Earnings (loss) from continuing operations before tax | 321 | 622 | (301) | 1,491 | 1,691 | (200) |
| Earnings (loss) from continuing operations | 194 | 520 | (326) | 1,140 | 1,388 | (248) |
| Earnings (loss) from discontinued operations | (1) | (13) | 12 | (7) | (18) | 11 |
| Net earnings (loss) | 193 | 507 | (314) | 1,133 | 1,370 | (237) |
| Net earnings (loss) attributable to Celanese Corporation | 191 | 506 | (315) | 1,127 | 1,366 | (239) |
| **Other Data** |  |  |  |  |  |  |
| Depreciation and amortization | 100 | 93 | 7 | 309 | 274 | 35 |
| SG&A expenses as a percentage of Net sales | 8.0% | 7.3% |  | 7.6% | 7.4% |  |
| Operating margin(1) | 13.4% | 23.7% |  | 18.0% | 22.8% |  |
| Other (charges) gains, net |  |  |  |  |  |  |
| Restructuring | (3) | (1) | (2) | (3) | (5) | 2 |
| Asset impairments | (12) | — | (12) | (12) | (2) | (10) |
| Plant/office closures | — | 1 | (1) | — | 10 | (10) |
| Total Other (charges) gains, net | (15) | — | (15) | (15) | 3 | (18) |

(1) Defined as Operating profit (loss) divided by Net sales.

*(unaudited)*

| Balance Sheet Data | As of September 30, 2022 (In $ millions) | As of December 31, 2021 |
| --- | ---: | ---: |
| Cash and cash equivalents | 9,671 | 536 |
| Short-term borrowings and current installments of long-term debt - third party and affiliates | 977 | 791 |
| Long-term debt, net of unamortized deferred financing costs | 11,360 | 3,176 |
| Total debt | 12,337 | 3,967 |

35

### Factors Affecting Business Segment Net Sales

The percentage increase (decrease) in Net sales attributable to each of the factors indicated for each of our business segments is as follows:

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

*(unaudited)*

|  | Volume (In percentages) | Price | Currency | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Engineered Materials | 23 | 25 | (12) | — | 36 |
| Acetate Tow | (3) | 8 | — | — | 5 |
| Acetyl Chain | (13) | 2 | (3) | — | (14) |
| Total Company | (2) | 9 | (5) | — | 2 |

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

*(unaudited)*

|  | Volume (In percentages) | Price | Currency | Other | Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Engineered Materials | 22 | 25 | (8) | — | 39 |
| Acetate Tow | (7) | 5 | — | — | (2) |
| Acetyl Chain | (4) | 14 | (2) | — | 8 |
| Total Company | 4 | 17 | (4) | — | 17 |

### Consolidated Results

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Net sales increased $35 million, or 2%, for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing in all of our segments, primarily driven by our Engineered Materials segment due to higher raw material costs, higher energy costs and product mix; and
- higher volume in our Engineered Materials segment, primarily in elastomers related to our acquisition of the Santoprene™ thermoplastic vulcanizates elastomers business of Exxon Mobil Corporation ("Santoprene");

partially offset by:

- lower volume in our Acetyl Chain segment due to decreased demand primarily in Asia and Europe; and
- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar.

Selling, general and administrative expenses increased $19 million, or 12%, for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher functional and project spending of $51 million in Other Activities;

partially offset by:

- lower incentive compensation cost.

Operating profit decreased $228 million, or 43%, for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher raw material and energy costs across all of our segments;
- lower Net sales in our Acetyl Chain segment; and
- higher spending in our Engineered Materials segment as a result of our acquisition of Santoprene, as well as plant operating and administrative expenses;

partially offset by:

- higher Net sales in our Engineered Materials segment.

Equity in net earnings (loss) of affiliates increased $29 million for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- an increase in equity investment in earnings of $39 million from our Ibn Sina strategic affiliate, primarily as a result of tighter market conditions and stronger demand.

Our effective income tax rate for the three months ended September 30, 2022 was 40% compared to 16% for the same period in 2021. The higher effective income tax rate was primarily due to increases in valuation allowances on U.S. foreign tax credit carryforwards due to revised forecasts of foreign sourced income and expenses during the carryforward period and increases in tax reserves related to ongoing income tax examinations. See Note 11 - Income Taxes in the accompanying unaudited interim consolidated financial statements for further information.

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales increased $1.1 billion, or 17%, for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing in all of our segments, primarily driven by our Acetyl Chain segment due to tighter market conditions as a result of increased customer demand in the Western Hemisphere and supply constraints across most regions, as well as our Engineered Materials segment due to higher raw material costs, energy costs and product mix; and
- higher volume in our Engineered Materials segment, primarily in elastomers related to our acquisition of Santoprene;

partially offset by:

- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar; and
- lower volume in our other segments, primarily driven by our Acetyl Chain segment due to decreased demand predominantly in Asia.

Selling, general and administrative expenses increased $92 million, or 20%, for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher functional and project spending of $117 million in Other Activities.

Operating profit decreased $107 million, or 7%, for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher raw material and energy costs across all of our segments; and
- higher spending across most of our segments, primarily driven by our Engineered Materials segment as a result of our acquisition of Santoprene, as well as plant operating and administrative expenses;

partially offset by:

- higher Net sales across most of our segments.

Non-operating pension and other postretirement employee benefit income decreased $39 million, or 35%, for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower expected return on plan assets and higher interest cost.

Equity in net earnings (loss) of affiliates increased $79 million for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- an increase in equity investment in earnings of $76 million from our Ibn Sina strategic affiliate, primarily as a result of tighter market conditions and stronger demand.

Our effective income tax rate for the nine months ended September 30, 2022 was 24% compared to 18% for the same period in 2021. The higher effective income tax rate was primarily due to increases in valuation allowances on U.S. foreign tax credit carryforwards due to revised forecasts of foreign sourced income and expenses during the carryforward period and increases in tax reserves related to ongoing income tax examinations and increased earnings in high tax jurisdictions. See Note 11 - Income Taxes in the accompanying unaudited interim consolidated financial statements for further information.

### Business Segments

### Engineered Materials

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2022 | 2021 | Change | % Change 2022 | Nine Months Ended September 30, 2021 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 929 | 684 | 245 | 35.8% | 2,787 | 2,011 | 776 | 38.6% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | 23% |  |  |  | 22% |  |  |  |
| Price | 25% |  |  |  | 25% |  |  |  |
| Currency | (12)% |  |  |  | (8)% |  |  |  |
| Other | —% |  |  |  | —% |  |  |  |
| Other (charges) gains, net | (14) | — | (14) | (100.0)% | (14) | 6 | (20) | (333.3)% |
| Operating profit (loss) | 114 | 91 | 23 | 25.3% | 404 | 344 | 60 | 17.4% |
| Operating margin | 12.3% | 13.3% |  |  | 14.5% | 17.1% |  |  |
| Equity in net earnings (loss) of affiliates | 69 | 39 | 30 | 76.9% | 171 | 96 | 75 | 78.1% |
| Depreciation and amortization | 43 | 35 | 8 | 22.9% | 134 | 105 | 29 | 27.6% |

Our Engineered Materials segment includes our engineered materials business, our food ingredients business and certain strategic affiliates. Our engineered materials business develops, produces and supplies a broad portfolio of high performance specialty polymers for automotive and medical applications, as well as industrial products and consumer electronics. Together with our strategic affiliates, our engineered materials business is a leading participant in the global specialty polymers industry. Our food ingredients business is a leading global supplier of acesulfame potassium for the food and beverage industry and is a leading producer of food protection ingredients, such as potassium sorbate and sorbic acid.

The pricing of products within the Engineered Materials segment is primarily based on the value of the material we produce and is generally independent of changes in the cost of raw materials, but may be impacted during periods of inflation and increased costs. Therefore, in general, margins may expand or contract in response to changes in raw material costs. We attempt to address increases in raw material costs through appropriate pricing actions.

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Net sales increased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing for most of our products, primarily due to higher raw material costs, higher energy costs and product mix; and
- higher volume, primarily in elastomers related to our acquisition of Santoprene;

partially offset by:

- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar.

Operating profit increased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher Net sales;

largely offset by:

- higher raw material costs for most of our products and increased sourcing costs as a result of higher logistical costs and global shipping constraints;
- higher energy costs of $66 million, primarily for steam;
- higher spending of $37 million, primarily as a result of our acquisition of Santoprene, as well as plant operating and administrative expenses; and
- an unfavorable impact of $14 million to Other (charges) gains, net. During the three months ended September 30, 2022, we recorded an $8 million long-lived asset impairment loss related to certain fixed and intangible assets used in manufacturing operations in Silao, Mexico in the current year. See Note 3 - Acquisitions, Dispositions and Plant Closures in the accompanying unaudited interim consolidated financial statements for further information.

Equity in net earnings (loss) of affiliates increased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- an increase in equity investment in earnings of $39 million from our Ibn Sina strategic affiliate, primarily as a result of tighter market conditions and stronger demand.

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales increased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing for most of our products, primarily due to higher raw material costs, higher energy costs and product mix; and
- higher volume, primarily in elastomers related to our acquisition of Santoprene;

partially offset by:

- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar.

Operating profit increased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher Net sales;

largely offset by:

- higher raw material costs for all of our products and increased sourcing costs as a result of higher logistical costs and global shipping constraints;
- higher energy costs of $146 million, primarily for steam;
- higher spending of $113 million, primarily as a result of our acquisition of Santoprene, as well as plant operating and administrative expenses; and
- an unfavorable impact of $20 million to Other (charges) gains, net. During the nine months ended September 30, 2021, we recorded a $9 million gain on the termination of our Ferrara Marconi, Italy office lease, which did not recur in the current year. During the nine months ended September 30, 2022, we recorded an $8 million long-lived asset impairment loss related to certain fixed and intangible assets used in manufacturing operations in Silao, Mexico in the current year.

Equity in net earnings (loss) of affiliates increased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- an increase in equity investment in earnings of $76 million from our Ibn Sina strategic affiliate, primarily as a result of tighter market conditions and stronger demand.

### Acetate Tow

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2022 | 2021 | Change | % Change 2022 | Nine Months Ended September 30, 2021 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 135 | 128 | 7 | 5.5% | 379 | 385 | (6) | (1.6)% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | (3)% |  |  |  | (7)% |  |  |  |
| Price | 8% |  |  |  | 5% |  |  |  |
| Currency | —% |  |  |  | —% |  |  |  |
| Other | —% |  |  |  | —% |  |  |  |
| Operating profit (loss) | (3) | 12 | (15) | (125.0)% | — | 52 | (52) | (100.0)% |
| Operating margin | (2.2)% | 9.4% |  |  | —% | 13.5% |  |  |
| Dividend income - equity investments | 30 | 34 | (4) | (11.8)% | 102 | 112 | (10) | (8.9)% |
| Depreciation and amortization | 10 | 10 | — | —% | 31 | 29 | 2 | 6.9% |

Our Acetate Tow segment serves consumer-driven applications. We are a leading global producer and supplier of acetate tow and acetate flake, primarily used in filter products applications.

The pricing of products within the Acetate Tow segment is sensitive to demand and is primarily based on the value of the product we produce. Many sales in this business are conducted under contracts with pricing for one or more years. As a result, margins may expand or contract in response to changes in market conditions over these similar periods, and we may be unable to adjust pricing due to other factors, such as the intense level of competition in the industry.

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Net sales increased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing, primarily due to higher raw material and energy costs.

Operating profit decreased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher energy costs of $10 million, primarily related to natural gas pricing; and
- higher raw material costs of $7 million as a result of cost inflation and global shipping constraints;

partially offset by:

- higher Net sales.

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales decreased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower acetate tow volume primarily related to dynamic market conditions, as well as supply constraints and shipping vessel disruptions;

partially offset by:

- higher pricing, primarily due to higher raw material and energy costs.

Operating profit decreased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher energy costs of $34 million, primarily related to natural gas pricing;
- higher raw material costs of $20 million as a result of cost inflation and global shipping constraints; and
- lower Net sales.

### Acetyl Chain

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2022 | 2021 | Change | % Change 2022 | Nine Months Ended September 30, 2021 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | 1,274 | 1,489 | (215) | (14.4)% | 4,268 | 3,954 | 314 | 7.9% |
| **Net Sales Variance** |  |  |  |  |  |  |  |  |
| Volume | (13)% |  |  |  | (4)% |  |  |  |
| Price | 2% |  |  |  | 14% |  |  |  |
| Currency | (3)% |  |  |  | (2)% |  |  |  |
| Other | —% |  |  |  | —% |  |  |  |
| Operating profit (loss) | 315 | 517 | (202) | (39.1)% | 1,243 | 1,284 | (41) | (3.2)% |
| Operating margin | 24.7% | 34.7% |  |  | 29.1% | 32.5% |  |  |
| Depreciation and amortization | 43 | 44 | (1) | (2.3)% | 130 | 128 | 2 | 1.6% |

Our Acetyl Chain segment includes the integrated chain of our intermediate chemistry, emulsion polymers, ethylene vinyl acetate ("EVA") polymers and redispersible powders ("RDP") businesses. Our intermediate chemistry business produces and supplies acetyl products, including acetic acid, vinyl acetate monomer ("VAM"), acetic anhydride and acetate esters. These products are generally used as starting materials for colorants, paints, adhesives, coatings and pharmaceuticals. It also produces organic solvents and intermediates for pharmaceutical, agricultural and chemical products. Our emulsion polymers business is a leading global producer of vinyl acetate-based emulsions and develops products and application technologies to improve performance, create value and drive innovation in applications such as paints and coatings, adhesives, construction, glass fiber, textiles and paper. Our EVA polymers business is a leading North American manufacturer of a full range of specialty EVA resins and compounds, as well as select grades of low-density polyethylene. Our EVA polymers products are used in many applications, including flexible packaging films, lamination film products, hot melt adhesives, automotive parts and carpeting. Our RDP business is a leading manufacturer of redispersible polymer powders, sold under the Elotex® brand. The business produces polymer emulsions which are converted into powdered thermoplastic resin materials. RDP products are used in a variety of applications in the mortar industry, including decorative mortar, exterior insulation and finish systems, gypsum-based materials, plaster and render, self-leveling floor systems, skim coat and tile adhesives.

The pricing of products within the Acetyl Chain is influenced by industry utilization rates and changes in the cost of raw materials. Therefore, in general, there is a directional correlation between these factors and our Net sales for most Acetyl Chain products. This impact to pricing typically lags changes in raw material costs over months or quarters.

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Net sales decreased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower volume for most of our products due to decreased demand primarily in Asia and Europe;
- lower pricing for acid, primarily due to weaker economic conditions particularly in China; and
- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar;

partially offset by:

- higher pricing for most of our other products, primarily due to tighter market conditions as a result of increased customer demand in the Western Hemisphere and supply constraints across most regions.

Operating profit decreased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower Net sales;
- higher raw material and sourcing costs, primarily for methanol and carbon monoxide due to stronger demand and tighter market conditions, as well as higher distribution costs due to global shipping constraints; and
- higher energy costs of $27 million, primarily due to price increases for natural gas and electricity.

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Net sales increased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher pricing for most of our products, primarily due to tighter market conditions as a result of increased customer demand in the Western Hemisphere and supply constraints across most regions; and
- higher volume, primarily for VAM due to lower competitor utilization in the Western Hemisphere;

partially offset by:

- lower volume for most of our other products due to decreased demand, primarily in Asia; and
- an unfavorable currency impact resulting from a weaker euro relative to the U.S. dollar.

Operating profit decreased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher raw material and sourcing costs, primarily for methanol, carbon monoxide and ethylene due to stronger demand and tighter market conditions, as well as higher distribution costs due to global shipping constraints;
- higher energy costs of $62 million, primarily due to price increases for natural gas and electricity; and
- higher spending of $49 million, primarily as a result of increased plant operating and maintenance expenses;

largely offset by:

- higher Net sales.

### Other Activities

*(unaudited)*

*(In $ millions, except percentages)*

|  | Three Months Ended September 30, 2022 | 2021 | Change | % Change 2022 | Nine Months Ended September 30, 2021 |  | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating profit (loss) | (118) | (84) | (34) | (40.5)% | (325) | (251) | (74) | (29.5)% |
| Non-operating pension and other postretirement employee benefit (expense) income | 25 | 37 | (12) | (32.4)% | 74 | 113 | (39) | (34.5)% |

Other Activities primarily consists of corporate center costs, including administrative activities such as finance, information technology and human resource functions, interest income and expense associated with financing activities and results of our captive insurance companies. Other Activities also includes the components of net periodic benefit cost (interest cost, expected return on assets and net actuarial gains and losses) for our defined benefit pension plans and other postretirement plans not allocated to our business segments.

#### Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Operating loss increased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher functional and project spending of $51 million;

partially offset by:

- lower incentive compensation cost.

Non-operating pension and other postretirement employee benefit income decreased for the three months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower expected return on plan assets and higher interest cost.

#### Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Operating loss increased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- higher functional and project spending of $117 million;

partially offset by:

- lower incentive compensation cost.

Non-operating pension and other postretirement employee benefit income decreased for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- lower expected return on plan assets and higher interest cost.

### Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents, dividends from our portfolio of strategic investments and available borrowings under our senior unsecured revolving credit facility. As of September 30, 2022, we have $1.75 billion available for borrowing under our senior unsecured revolving credit facility, if required, in meeting our working capital needs and other contractual obligations. In addition, we held cash and cash equivalents of $9.7 billion as of September 30, 2022. We are actively managing our business to maintain cash flow, and we believe that liquidity from the above-referenced sources will be sufficient to meet our operational and capital investment needs and financial obligations for the foreseeable future.

On February 17, 2022, we signed a definitive agreement to acquire a majority of the Mobility & Materials business of DuPont de Nemours, Inc. (the "M&M Acquisition") for a purchase price of $11.0 billion, subject to certain adjustments, in an all-cash transaction. For further information regarding the acquisition and related financing transactions, see *Debt and Other Obligations* in this *Liquidity and Capital Resources* and Note 3 - Acquisitions, Dispositions and Plant Closures in the accompanying unaudited interim consolidated financial statements. We closed on the M&M Acquisition on November 1, 2022. See Note 19 - Subsequent Events in the accompanying unaudited interim consolidated financial statements for further information.

Our incurrence of debt to finance the purchase price for the M&M Acquisition has increased our leverage and will increase, as of the closing of the M&M Acquisition, our ratio of indebtedness to consolidated EBITDA as set forth in our senior unsecured credit facilities. We believe that cash flows from our operations, together with cash generation, synergy opportunities from the M&M Acquisition and cost reduction initiatives, will support our deleveraging efforts over the next few years. In furtherance of these deleveraging efforts, we have paused our share repurchase program, reevaluated and reduced our anticipated 2022 capital expenditures by approximately $50 million and are in the process of evaluating additional cash generation opportunities which may include the opportunistic disposition or monetization of product or business lines or other assets. We are committed to rapid deleveraging and to maintaining our investment grade debt rating.

While our contractual obligations, commitments and debt service requirements over the next several years are significant, we continue to believe we will have available resources to meet our liquidity requirements, including debt service, for the next twelve months. If our cash flow from operations is insufficient to fund our debt service and other obligations, we may be required to use other means available to us such as increasing our borrowings, reducing or delaying capital expenditures, seeking additional capital or seeking to restructure or refinance our indebtedness. There can be no assurance, however, that we will continue to generate cash flows at or above current levels.

We continue to prioritize those projects expected to drive productivity in the near term and expect capital expenditures to be approximately $550 million in 2022, primarily due to certain investments in growth opportunities and productivity improvements. In Engineered Materials, our planned expansion of the compounding capacity at our facilities in China is experiencing some delays due to certain permitting issues. In the Acetyl Chain, our planned expansion of (1) the capacity of our vinyl acetate ethylene ("VAE") and emulsions plants in Nanjing, China, (2) the capacity of our vinyl acetate monomer ("VAM") plant in Bay City, Texas and (3) the sustainable production of methanol at our Fairway joint venture in Clear Lake, Texas using captured carbon dioxide as feedstock, are on schedule. Lastly, our planned acetic acid expansion in Clear Lake, Texas and our VAE emulsion plant expansion in Frankfurt, Germany, are still in construction and on schedule. We continue to see the incremental capacity from investments made in recent years strengthen our manufacturing network reliability to best serve our customers.

On a stand-alone basis, Celanese and its immediate 100% owned subsidiary, Celanese U.S., have no independent external operations of their own. Accordingly, they generally depend on the cash flow of their subsidiaries and their ability to pay dividends and make other distributions to Celanese and Celanese U.S. in order to meet their obligations, including their obligations under senior credit facilities and senior notes, and to pay dividends on our Common Stock.

We are subject to capital controls and exchange restrictions imposed by the local governments in certain jurisdictions where we operate, such as China, India and Indonesia. Capital controls impose limitations on our ability to exchange currencies, repatriate earnings or capital, lend via intercompany loans or create cross-border cash pooling arrangements. Our largest exposure to a country with capital controls is in China. Pursuant to applicable regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, the Chinese government imposes certain currency exchange controls on cash transfers out of China, puts certain limitations on duration, purpose and amount of intercompany loans, and restricts cross-border cash pooling. While it is possible that future tightening of these restrictions or application of new similar restrictions could impact us, these limitations do not currently restrict our operations.

We remain in compliance with the financial covenants under our senior unsecured credit facilities and expect to remain in compliance based on our current expectation of future results of operations. If our actual future results of operations differ materially from these expectations, we may be required to seek an amendment or waiver of such covenants which may increase our borrowing costs under those debt instruments.

### Cash Flows

Cash and cash equivalents increased $9.1 billion to $9.7 billion as of September 30, 2022 compared to December 31, 2021. As of September 30, 2022, $825 million of the $9.7 billion of cash and cash equivalents was held by our foreign subsidiaries. Under the TCJA, we have incurred a prior year charge associated with the deemed repatriation of previously unremitted foreign earnings, including foreign held cash. These funds are largely accessible without additional material tax consequences, if needed in the U.S., to fund operations.

- ***Net Cash Provided by (Used in) Operating Activities***

Net cash provided by operating activities increased $105 million to $1.3 billion for the nine months ended September 30, 2022 compared to the same period in 2021, primarily due to:

- a decrease in VAT taxes receivable primarily due to the receipt of refunds during the nine months ended September 30, 2022;
- a payment for the European Commission settlement of $100 million, which did not recur in the current year; and
- favorable trade working capital of $65 million, primarily due to a decrease in trade receivables and trade payables, partially offset by an increase in inventory. Trade receivables decreased primarily as a result of the timing of trade receivable collections during the nine months ended September 30, 2022 and trade payables decreased as a result of the timing of settlement of trade payables. Inventory increased primarily as a result of higher costs for raw materials during the nine months ended September 30, 2022;

partially offset by:

- a decrease in Net earnings.
- ***Net Cash Provided by (Used in) Investing Activities***

Net cash used in investing activities increased $595 million to $428 million for the nine months ended September 30, 2022 compared to net cash provided by investing activities of $167 million for the same period in 2021, primarily due to:

- proceeds from the sale of marketable securities of $500 million, which did not recur in the current year; and
- an increase of $96 million in capital expenditures during the nine months ended September 30, 2022.
- ***Net Cash Provided by (Used in) Financing Activities***

Net cash provided by financing activities increased $9.3 billion to $8.3 billion for the nine months ended September 30, 2022 compared to net cash used in financing activities of $943 million for the same period in 2021, primarily due to:

- an increase in net proceeds of long-term debt of $8.8 billion, primarily due to the issuance of senior unsecured notes consisting of $2.0 billion in principal amount of 5.900% notes due July 5, 2024, $1.75 billion in principal amount of 6.050% notes due March 15, 2025, $2.0 billion in principal amount of 6.165% notes due July 15, 2027, $750 million in principal amount of 6.330% notes due July 15, 2029 and $1.0 billion in principal amount of 6.379% notes due July 15, 2032 (collectively, the "Acquisition USD Notes"), as well as senior unsecured notes consisting of €1.0 billion in principal amount of 4.777% notes due July 19, 2026 and €500 million in principal amount of 5.337% notes due January 19, 2029 (collectively, the "Acquisition Euro Notes" and, together with the Acquisition USD Notes, the "Acquisition Notes"), partially offset by the maturity of the 5.875% senior unsecured notes ("5.875% Notes") which were repaid during the nine months ended September 30, 2021;
- a decrease in share repurchases of our Common Stock of $786 million during the nine months ended September 30, 2022; and
- settlement of a forward-starting interest rate swap of $72 million, which did not recur in the current year;

partially offset by:

- a decrease in net borrowings on short-term debt of $260 million, primarily due to borrowing under the senior unsecured revolving credit facility to repay the 5.875% Notes which matured during the nine months ended September 30, 2021; and
- a payment of $63 million during the nine months ended September 30, 2022 for fees related to a bridge facility commitment letter with Bank of America, N.A. ("Bank of America") pursuant to which Bank of America has committed to provide, subject to the terms and conditions set therein, a 364-day $11.0 billion senior unsecured bridge term loan facility (the "Bridge Facility").

### Debt and Other Obligations

On March 18, 2022, we entered into a term loan credit agreement (the "March 2022 Term Loan Credit Agreement"), pursuant to which lenders have committed to provide a tranche of delayed-draw term loans due 364 days from issuance in an amount equal to $500 million and a tranche of delayed-draw term loans due 5 years from issuance in an amount equal to $1.0 billion. On September 16, 2022, Celanese, Celanese U.S. and certain subsidiaries entered into an additional term loan credit agreement (the "September 2022 Term Loan Credit Agreement" and, together with the March 2022 Term Loan Credit Agreement, the "Term Loan Credit Agreements"), pursuant to which lenders have committed to provide delayed-draw term loans due 3 years from issuance in an amount equal to $750 million (the term loans represented by the Term Loan Credit Agreements collectively, the "Term Loan Facility"). The Term Loan Facility is guaranteed by Celanese and domestic subsidiaries representing substantially all of our U.S. assets and business operations.

On March 18, 2022, we entered into a new revolving credit agreement (the "New Revolving Credit Agreement" and, together with the Term Loan Credit Agreements the "Credit Agreements") consisting of a $1.75 billion senior unsecured revolving credit facility (with a letter of credit sublimit), maturing in 2027. The proceeds of a $365 million borrowing under the new senior unsecured revolving credit facility were used to repay and terminate our existing revolving credit facility.

On July 14, 2022 and July 19, 2022, Celanese U.S. completed the offerings of the Acquisition USD Notes and Acquisition Euro Notes, respectively. Fees and expenses of the offering of the Acquisition Notes, inclusive of underwriting discounts, were $65 million.

The entry into the Term Loan Credit Agreements and the offerings of the Acquisition Notes reduced availability under the Bridge Facility to zero, and we terminated the Bridge Facility. During the nine months ended September 30, 2022, the Company paid $66 million in fees related to the Bridge Facility commitment, amortizing these fees to interest expense.

The Term Loan Facility, subject to the terms and conditions set forth in the Term Loan Credit Agreements, together with the Acquisition Notes and additional debt financing, will be available to finance the M&M Acquisition, and to pay fees and expenses related thereto.

On November 1, 2022, we borrowed $300 million under our senior unsecured revolving credit facility for general corporate purposes, reducing availability of borrowings under the facility to $1.45 billion.

See Note 3 - Acquisitions, Dispositions and Plant Closures and Note 7 - Debt in the accompanying unaudited interim consolidated financial statements for further information.

There have been no material changes to our debt or other obligations described in our 2021 Form 10-K other than those disclosed above and in Note 7 - Debt in the accompanying unaudited interim consolidated financial statements.

### Accounts Receivable Purchasing Facility

In June 2021, we entered into an amendment to the amended and restated receivables purchase agreement under our U.S. accounts receivable purchasing facility among certain of our subsidiaries, our wholly-owned, "bankruptcy remote" special purpose subsidiary ("SPE") and certain global financial institutions ("Purchasers"). We de-recognized $802 million and $1.1 billion of accounts receivable under this agreement for the nine months ended September 30, 2022 and twelve months ended December 31, 2021, respectively, and collected $802 million and $1.1 billion of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $130 million were pledged by the SPE as collateral to the Purchasers as of September 30, 2022.

### Factoring and Discounting Agreements

We have factoring agreements in Europe and Singapore with financial institutions to sell 100% and 90% of certain accounts receivable, respectively, on a non-recourse basis. We de-recognized $228 million and $230 million of accounts receivable under these factoring agreements for the nine months ended September 30, 2022 and twelve months ended December 31, 2021, respectively, and collected $234 million and $185 million of accounts receivable sold under these factoring agreements during the same periods.

In March 2021, we entered into an agreement in Singapore with a financial institution to discount, on a non-recourse basis, documentary credits or other documents recorded as accounts receivable. We de-recognized $41 million and $70 million of accounts receivable under this agreement for the nine months ended September 30, 2022 and twelve months ended December 31, 2021, respectively.

See Note 7 - Debt in the accompanying unaudited interim consolidated financial statements for further information.

### Guarantor Financial Information

We have outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933, as amended (collectively, the "Senior Notes"). The Senior Notes were issued by Celanese U.S. ("Issuer") and are guaranteed by Celanese Corporation ("Parent Guarantor") and the Subsidiary Guarantors (collectively the "Obligor Group"). See Note 7 - Debt in the accompanying unaudited interim consolidated financial statements for further information. The Issuer and Subsidiary Guarantors are 100% owned subsidiaries of the Parent Guarantor. The Subsidiary Guarantors are listed in Exhibit 22.1 to this Quarterly Report.

The Parent Guarantor and the Subsidiary Guarantors have guaranteed the Senior Notes on a full and unconditional, joint and several, senior unsecured basis. The guarantees are subject to certain customary release provisions, including that a Subsidiary Guarantor will be released from its respective guarantee in specified circumstances, including (i) the sale or transfer of all of its assets or capital stock; (ii) its merger or consolidation with, or transfer of all or substantially all of its assets to, another person; or (iii) its ceasing to be a majority-owned subsidiary of the Issuer in connection with any sale of its capital stock or other transaction. Additionally, a Subsidiary Guarantor will be released from its guarantee of the Senior Notes at such time that it ceases to guarantee the Issuer's obligations under the Credit Agreements (subject to the satisfaction of customary document delivery requirements). The obligations of the Subsidiary Guarantors under their guarantees are limited as necessary to prevent such guarantees from constituting a fraudulent conveyance or fraudulent transfer under applicable law.

The Parent Guarantor and the Issuer are holding companies that conduct substantially all of their operations through their subsidiaries, which own substantially all of our consolidated assets. The Parent Guarantor has no material assets other than the stock of its immediate 100% owned subsidiary, the Issuer. The principal source of cash to pay the Parent Guarantor's and the Issuer's obligations, including obligations under the Senior Notes and the guarantee of the Issuer's obligations under the Credit Agreement, is the cash that our subsidiaries generate from their operations. Each of the Subsidiary Guarantors and our non-guarantor subsidiaries is a distinct legal entity and, under certain circumstances, applicable country or state laws, regulatory limitations and terms of other debt instruments may limit our subsidiaries' ability to distribute cash to the Issuer and the Parent Guarantor.

For cash management purposes, we transfer cash among the Parent Guarantor, Issuer, Subsidiary Guarantors and non-guarantors through intercompany financing arrangements, contributions or declaration of dividends between the respective parent and its subsidiaries. While the non-guarantor subsidiaries do not guarantee the Issuer's obligations under our outstanding debt, the transfer of cash under these activities facilitates the ability of the recipient to make specified third-party payments for principal and interest on the Senior Notes, Credit Agreement, other outstanding debt, Common Stock dividends and Common Stock repurchases.

The summarized financial information of the Obligor Group is presented below on a combined basis after the elimination of: (i) intercompany transactions among such entities and (ii) equity in earnings from and investments in the non-guarantor subsidiaries. Transactions with, and amounts due to or from, non-guarantor subsidiaries and affiliates are separately disclosed.

*(unaudited)*

|  | Nine Months Ended September 30, 2022 (In $ millions) |
| --- | ---: |
| Net sales to third parties | 1,550 |
| Net sales to non-guarantor subsidiaries | 743 |
| Total net sales | 2,293 |
| Gross profit | 379 |
| Earnings (loss) from continuing operations | (218) |
| Net earnings (loss) | (222) |
| Net earnings (loss) attributable to the Obligor Group | (222) |

*(unaudited)*

|  | As of September 30, 2022 (In $ millions) | As of December 31, 2021 |
| --- | ---: | ---: |
| Receivables from non-guarantor subsidiaries | 511 | 624 |
| Other current assets | 10,139 | 1,236 |
| Total current assets | 10,650 | 1,860 |
| Goodwill | 578 | 578 |
| Other noncurrent assets | 2,892 | 2,584 |
| Total noncurrent assets | 3,470 | 3,162 |
| Current liabilities due to non-guarantor subsidiaries | 3,097 | 2,493 |
| Current liabilities due to affiliates | 15 | 64 |
| Other current liabilities | 1,721 | 1,347 |
| Total current liabilities | 4,833 | 3,904 |
| Noncurrent liabilities due to non-guarantor subsidiaries | 2,316 | 2,348 |
| Other noncurrent liabilities | 11,902 | 3,610 |
| Total noncurrent liabilities | 14,218 | 5,958 |

### Share Capital

We declared a quarterly cash dividend of $0.70 per share on our Common Stock on October 19, 2022, amounting to $76 million.

There have been no material changes to our share capital described in our 2021 Form 10-K other than those disclosed above and in Note 10 - Stockholders' Equity in the accompanying unaudited interim consolidated financial statements.

### Contractual Obligations

We have not entered into any material off-balance sheet arrangements.

Except as otherwise described in this report, there have been no material revisions outside the ordinary course of business to our contractual obligations as described in our 2021 Form 10-K.

### Tax Return Audits

Our tax returns are under joint audit for the years 2013 through 2015 by the United States, Netherlands and Germany (the "Authorities"). In September 2021, we received a draft joint audit report proposing adjustments to transfer pricing and the reallocation of income between the related jurisdictions. The Authorities also propose to apply these adjustments to open tax years through 2019. We are engaged in discussions with the Authorities to evaluate the proposals. During the three months ended September 30, 2022, we recorded additional tax reserves of $25 million for years prior to 2022 based on unilateral discussions with one of the relevant authorities. We are currently evaluating all additional potential remedies. See Note 11 - Income Taxes in the accompanying unaudited interim consolidated financial statements for further information.

### Business Environment

We continue to experience significant cost inflation, inflationary pressure and supply disruptions related to the sourcing of raw materials, energy, logistics and labor in 2022. We continue to closely monitor the impact of, and responses to, COVID-19 variants, including government imposed lockdowns in China and elsewhere, and geopolitical effects on demand conditions and the supply chain. Demand conditions across certain regions in the Western Hemisphere and China have deteriorated, creating uncertainty, impacting consumer activity and driving customer destocking. Average prices of energy feedstocks, particularly natural gas, which are a significant input and source of energy for our manufacturing operations, have continued to increase in the Western Hemisphere and particularly in Europe. We also experienced cost pressure on raw material inputs. We have continued pricing actions intended to offset these inflationary headwinds. Continued moderation of acetyls pricing is expected to trend to more normalized levels through the end of 2022. We expect that sourcing costs and inflationary pressures will continue to be significant across the business throughout the rest of the year.

We continue to monitor and respond to the situation in Ukraine. While the conflict has not had a material impact on our business, financial condition or results of operations to date, we have experienced shortages in materials and increased costs for transportation, energy and raw materials as well as other supply chain challenges, particularly in Europe, due in part to the effects of the conflict, and government responses thereto, including sanctions, on the global economy. We continue to monitor these developments.

Following Russia's invasion, we have suspended sales into Russia, Belarus and the sanctioned regions of Ukraine. Revenue from these countries and regions constituted less than 1% of our consolidated Net sales in fiscal year 2021 and we have no manufacturing assets in these countries or regions.

We do not currently expect the situation to result in a material impact on our business or financial results, but the full impact of the conflict remains uncertain and will depend on future geopolitical and economic developments that are impossible to predict. Potential risks we may face include increased volatility in capital and commodity markets, rapid changes to sanctions, continued supply chain and transportation disruptions, exacerbation of inflationary conditions, impacts to consumer or business sentiment and an increased risk of cyber security incidents as well as the impacts referenced above.

### Critical Accounting Policies and Estimates

Our unaudited interim consolidated financial statements are based on the selection and application of significant accounting policies. The preparation of unaudited interim consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of Net sales, expenses and allocated charges during the reporting period. Actual results could differ from those estimates. However, we are not currently aware of any reasonably likely events or circumstances that would result in materially different results.

We describe our significant accounting policies in Note 2 - Summary of Accounting Policies, of the Notes to the Consolidated Financial Statements included in our 2021 Form 10-K. We discuss our critical accounting policies and estimates in MD&A in our 2021 Form 10-K.

### Recent Accounting Pronouncements

See Note 2 - Recent Accounting Pronouncements in the accompanying unaudited interim consolidated financial statements included in this Quarterly Report for information regarding recent accounting pronouncements.

## Market risk

As filed, 482 characters.

Market risk for the Company has not changed materially from the foreign exchange, interest rate and commodity risks disclosed in Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our 2021 Form 10-K. See also Note 12 - Derivative Financial Instruments in the accompanying unaudited interim consolidated financial statements for further discussion of our market risk management and the related impact on the Company's financial position and results of operations.

## Controls and procedures

As filed, 861 characters.

### Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on that evaluation, as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.

### Changes in Internal Control Over Financial Reporting

During the period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 7,310 characters.

Additional risk factors are described below and should be read in conjunction with Part I, Item 1A of our 2021 Form 10-K.

**Risks Relating to the acquisition of the majority of the Mobility & Materials business (the "M&M Acquisition" and such business being acquired, the "M&M Business") of DuPont de Nemours, Inc. ("DuPont")**

***We have made certain assumptions relating to the M&M Acquisition which may prove to be materially inaccurate and we may fail to realize all of the anticipated benefits of the acquisition.***

We have made certain assumptions relating to the M&M Acquisition, which may prove to be inaccurate. Our failure to identify or understand the magnitude of the problems, liabilities or other challenges associated with the M&M Acquisition could result in incorrect expectations of future results and increased risk of unanticipated or unknown issues or liabilities. Our mitigation strategies for such risks that are identified may be ineffective. These assumptions relate to numerous matters, including:

- general economic and business conditions, and performance of the M&M Business against this backdrop;
- potential unknown liabilities and unforeseen delays or regulatory conditions associated with the M&M Acquisition;
- faulty assumptions or incorrect expectations regarding the process of integrating the M&M Business with ours, including unanticipated delays, costs or inefficiencies;
- the anticipated benefits and synergies, including timing for when such benefits and synergies may be realized through combining the M&M Business with ours;
- the amount of attention and resources needed to successfully align our and the M&M Business's practices and operations which may disrupt our business, including challenges relating to integrating commercial activities, technologies, procedures, policies, retaining key personnel and addressing differences in the business cultures of our business and the M&M Business;
- the complexities associated with managing the combined businesses;
- potential increases in the challenges and risks, including commercial and financial risks, associated with our broader international business footprint, and increased exposure to certain end markets and geographies, as a result of the M&M Acquisition which will expand our presence to markets in which we may not have previously done business; and
- other financial and strategic risks of the M&M Acquisition.

We cannot guarantee that we will achieve our goals or meet our expectations with respect to the M&M Acquisition. Through our review to-date since the November 1, 2022 closing, we have learned that for the remainder of 2022 the M&M Business is expected to underperform prior expectations, and its financial performance from signing through the closing has been lower than anticipated. We cannot be certain when we will be able to realize improvements in the underlying M&M Business performance and as we proceed with integration, we may identify additional risks and challenges. The benefits of the M&M Acquisition, including the anticipated financial benefits and the synergies and growth opportunities, may not be realized as expected or may not be achieved within the anticipated timeframe, or at all. If our assumptions are inaccurate or we are unable to meet our expectations (including our expectations regarding financial targets), our business, financial performance and operating results could be materially and adversely affected.

***Financing the M&M Acquisition has resulted in an increase in our indebtedness, which could adversely affect us, including by decreasing our business flexibility and increasing our interest expense.***

The increase in our indebtedness to finance the M&M Acquisition may, among other things, reduce our flexibility to respond to changing business and economic conditions or to fund capital expenditures or working capital needs. In addition, the amount of cash required to pay interest on our increased indebtedness, and thus the demands on our cash resources, has materially increased as a result of the indebtedness to finance the M&M Acquisition.

### We will incur direct and indirect costs as a result of the M&M Acquisition.

We have incurred and expect to continue to incur a number of non-recurring costs associated with negotiating and completing the M&M Acquisition, combining the operations of our business and the M&M Business and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. Non-recurring expenses include, among others, employee retention costs, fees paid to financial, legal, integration and accounting advisors, severance and benefit costs. We will also incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. We will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the M&M Acquisition and the integration of the M&M Business into our business. Although we expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the M&M Business, should allow us to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on our financial condition and results of operations following the completion of the M&M Acquisition. Factors beyond our control could affect the total amount or timing of these expenses, many of which, by their nature, are difficult to estimate accurately.

***The risk of non-compliance with non-U.S. laws, regulations and policies could adversely affect our results of operations, financial condition or strategic objectives.***

The M&M Acquisition will introduce us into a number of new geographic markets, subjecting us to additional non-U.S. laws, regulations and policies which do not currently apply to us, and will increase our exposure to certain other geographic markets as well as their laws and regulations. These laws and regulations are complex, change frequently, have become more stringent over time, could increase our cost of doing business, and could result in conflicting legal requirements. These laws and regulations include international labor and employment laws, environmental regulations and reporting requirements, data privacy requirements, and local laws prohibiting corrupt payments to government officials, antitrust and other regulatory laws. We will be subject to the risk that we, our employees, our agents, or our affiliated entities, or their respective officers, directors, employees and agents, may take actions determined to be in violation of any of these laws, regulations or policies, for which we might be held responsible. Actual or alleged violations could result in substantial fines, sanctions, civil or criminal penalties, debarment from government contracts, curtailment of operations in certain jurisdictions, competitive or reputational harm, litigation or regulatory action and other consequences that might adversely affect our results of operations, financial condition or strategic objectives.

Filed Nov 4, 2022.
Source: SEC EDGAR, the filing index for accession 0001306830-22-000184. Last ingested by Listed: Oct 24, 2026, 15:11 ET. No prices; not investment advice.