Greetings! Welcome to the Celanese Second Quarter 2023 earnings call and webcast. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the opening remarks. If anyone should require operator assistance during the call, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. At this time, I would like to hand the call over to Brandon Ayache, Vice President of Investor Relations. Thank you. You may begin. Thank you, Darryl. Welcome to the Celanese Corporation Second Quarter 2023 earnings conference call. My name is Brandon Ayache, Vice President of Investor Relations. With me today on the call are Lori Ryerkerk, Chairman of the Board and Chief Executive Officer, and Scott Richardson, Chief Financial Officer. Celanese distributed its second quarter earnings release via Business Wire and posted prepared comments 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 prepared comments. Form 8-K reports containing all of these materials have also been submitted to the SEC. Since we published our prepared comments yesterday, we'll go ahead and go directly to questions. Darryl, please go ahead and open up the line for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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 one question and one follow-up question. One moment, please, while we poll for your question. Our first questions come from the line of Ghansham Panjabi with Baird. Please proceed with your question. Hey, guys. Good morning. I guess first off, you know, Lori, in your prepared comments, you had some comments about China and some of the trends that you saw in in 3Q. I was just hoping you'd give us a little bit more color in terms of how things are evolving at that point, you know, in context of all the chatter about stimulus, et cetera. Are you starting to see any, any signs of that permeating through to your business? Thank you, Ghansham. When we look at China, you know, it, it's been a difficult year in China, clearly, as we've seen depressed demand, consistent with the rest of the world, but probably more pronounced in China. I think what we see different now as we start moving through the year, and we saw some signs of it, early in 2Q already, is despite lower demand conditions, conditions, especially for the Acetyl Chain seem a bit tighter. The reason I say that is when we saw some unexpected outages in the second quarter and here really in July, you know, we did see pretty rapid price response to those outages, which suggests that there's not a lot of spare inventory or spare capacity in that area. You know, if you look at utilization for acetyls, for China, for global acid, it's around 90%, about the same in China. Again, that, that suggests to us that although demand hasn't recovered significantly, there is enough demand matched with the supply that we are in a place where we can see some price movement up as we see supply growing. I would say we're not seeing a lot of response yet to the stimulus. We hear a lot about it. We haven't seen a lot of response yet, but we think it's coming. There are some pockets of strength in China. In particular, autos remains pretty strong in China and the broader, broader Asia area, but we see the pockets of weakness as well. Electronics, especially consumer electronics, consumer goods, and I would say challenged by the situation in Europe and the poor economy in Europe, which is limiting exports out of China, which is also, you know, I think, putting a damper on, on production of goods in China. Okay, terrific. Thanks for that, Lori. In terms of the current operating environment, obviously, it's very, you know, complex, and you're pulling the levers that you need to in terms of managing supply, et cetera. You know, in, in the scenario that this sort of complexity spills over into, into 2024, what are some of the other internal offsets we should keep in mind as it relates to the variances, 2024 versus 2023 from an earnings standpoint? Ghansham, I think you've hit a good point. We really have no visibility into 2024 at this time, so we don't really know what demand is going to look like in 2024. If I had to guess, I'd say it's gonna be 2023, better than 2023, but, you know, we, we don't know. There are a few things we do know that we know will give us an uplift, and we are confident will give us an uplift in 2024. If you start with the Engineered Materials side, you know, with the amount of inventory drawdown we're doing this year, we will be able to have completely flushed through our higher cost inventory as we move into 2024, which will give us lower variable costs in 2024. We'll see less hits to our P&L from the inventory reductions. We'll see those in 2023. We don't anticipate a lot of those continuing into 2024, so that will be an uplift. We have an additional $150 million of M&M synergies, which will hit next year. That's helped by our first quarter SAP integration, which will get everything on the system and give us additional opportunities for and for synergy as we get everything fully integrated and, and cost takeout. Of course, you know, with the lack of destockings, I would expect to see next year, since we'll have taken so much destocking this year, in addition to, you know, that lift then we'll get from share recovery, we should continue to see M&M volume recovery in particular. On the Acetyl Chain side, you know, we know at a minimum, we have at least this additional $100 million contribution from Clear Lake acid that we have next year. With the more than $1 billion of net debt reduction that we'll take this year, we'll have lower interest expenses next year. Again, if you take all those factors, those are things that we feel very confident will lift our earnings from 2023 to 2024, regardless of what happens to demand. Thanks so much. Thank you. Our next questions come from the line of Michael Leithead with Barclays. Please proceed with your questions. Great. Thank you. Good morning. First question, when you look at the weakness in Engineered Materials during 2Q and into 3Q, can you help us roughly understand how much is just due to weaker end demand versus how much is due to weaker price? Other than POM, can you talk about where you're seeing the most competitive pricing pressure today? Sure. Thanks, Mike, for your question. As we look at Q2, you know, if we look at what we had guided to versus our performance, I mean, clearly, we were, we were below what we had expected in the quarter. I'd say half of that gap came from the M&M side. About half of that was really the inventory drawdown in M&M, which we really hadn't anticipated, so the earnings associated with that. The other half is really just the weak demand, again, especially industrial and electronic. How I would try to describe what's happened in demand is if you look at differentiated products, that's really where we've seen lower volumes. We've seen our customers taking lower volumes of differentiated products, again, because they don't have the end market for their goods. We haven't moved price undifferentiated. We've been able to hold price, but we've just seen the volume drop off. We have chosen to take molecules instead of moving them and therefore not needing them undifferentiated. We've gone ahead and increased sales into the standard grade market, where we are able to capture volume, but at a lower margin or a lower price. So it is a combination of volume and price, and it is a big factor of mix in terms of less differentiated, more standard grade. Again, allows us to keep volume, which we think is important as we move towards recovery, but we've had to take some price concessions to make that happen. Got it. Okay. Okay. In terms of what molecules, I mean, POM is certainly the big one. I'd say for the heritage Celanese molecules, we've had a few others, especially those more differentiated molecules that go into electronics, connectors, and that sort of thing, which have also had a volume impact. Again, I think it's short term. I think we'll see recovery there. Then on the M&M side, it's nylon. Again, I would say it's that switch from differentiated standard grade, more, is more significant in terms of earnings than necessarily the volume, any volume impact. Okay, that's super helpful. Then just second, if I look at your updated EPS guidance, it, it seems to imply going from about $2.25 at the midpoint in the third quarter to slightly north of $3 in 4 Q. Can you just help us understand what you think kind of gets sequentially better there in the fourth quarter? Sure. You know, as we move from the 3rd quarter to the 4th quarter, there's a couple of things happening. One is, you know, we have initiated about an additional $60 million-$80 million of cost control, and most of that impact will show up in the 4th quarter since this is work that we've been doing just the last few months. Most of that will show up in the 4th quarter. You have additional M&M synergies, which show up in the 4th quarter versus 3rd quarter. We are expecting a pretty robust 4th quarter. In fact, right now, we would say we would expect 4th quarter to be our best quarter of the year. Partly, we think that's on destocking. We think destocking in the Western Hemisphere should be over for the most part in the third quarter, probably a little bit of destocking carrying into the fourth quarter from Asia. We also think we'll have less seasonality because we've had so much destocking across the year, we wouldn't expect the usual amount of seasonal destocking that we see in the fourth quarter. The last factor I would say is, given the acquisition of M&M, we are now more heavily weighted towards Asia and China than we were before, and typically, fourth quarter is a very strong quarter in Asia and China as we go before Chinese New Year, which will more than offset any seasonality we would expect to see in the Western Hemisphere. Great. Thank you. Thank you. Our next question has come from the line of Jeff Zekauskas with J.P. Morgan. Please proceed with your questions. Thanks very much. Can you talk about VAM volume growth or contraction by geography, please? Thanks, Jeff. On VAM, in general, the markets have been a little weak for VAM, as we've seen. I would say Europe is still our most challenged geography. Really, there, there's not been a rebound in paints and coatings, construction and building. As we continue to see the economy, you know, really drag on VAM, I think, you know, globally, the indication of this is we do see VAM utilization has moderated into the mid-80s on a global basis, which is the lowest we've seen for many years, I would say, I mean, really, since early COVID. We are seeing some recovery in VAM in the U.S., I'd say, especially or in the Americas, I should say, especially in packaging. Packaging continues to be pretty strong, that's one of our bigger end markets in the Americas. In China, although we see, you know, some of the more industrial uses of VAM coming back, again, not seen a lot of rebound yet in construction and building, although with some of the stimulus that's been announced, you know, perhaps that is to come here in the second half. Okay. Then for Scott, are there any hard objectives that you need to reach in order to retain your investment grade rating, or are there no hard objectives? Yeah, I think, you know, Jeff, we've been talking very consistently, going back to when we announced the deal in 2022, about two focus areas. The first is reducing net debt by $1 billion in 2023, then achieving 3 times levered towards the end of 2024 into early 2025. I think those continue to be where we're focused on. I think that first objective, as we called out in the prepared comments, we're very confident, given the cash flow that we're gonna generate this year, of hitting that, that $1 billion of debt reduction. Then with the additional proceeds coming in from the Food Ingredients transaction, that will allow us to actually go up another $450 million above that from a debt reduction perspective. Definitely on track, and tracking ahead for that first objective, and then, you know, continuing to build plans and a focus around cash generation and harvesting, as well as the EBITDA lift into 2024 that Lori talked about a few minutes ago, to be able to get to that second objective. Great. Thank you so much. Thank you. Our next questions come from the line of Josh Spector with UBS. Please proceed with your questions. Yeah, thanks for taking my question. Just, you know, in your prepared remarks, you talked about the mixed impact within M&M, and just to recall, one of your opportunities to grow earnings, you were gonna go after some of the more commodity markets that maybe DuPont walked away from. Has anything there changed in terms of that, that mixed impact or really where you can go after different shares? Any of that taking place this year, or is that more of a longer-term target now? No, I wouldn't say it's a longer-term target. It's just, you know, it will take us probably through the end of 2024, maybe even into 2025, to recover all of that volume. I mean, some of the strengths you see in M&M volume is starting to get some of that standard grade back. Again, we've had some offsets, though, as we've had lower demand for differentiated grades, but we have been able to go after and get some of that standard grade back. I mean, the good news is, you know, DuPont, I tell, has really been spec'd into all of these standard grades at some point, so it's not a question of having to recertify. Some of the standard grade markets do work on contract, so we need to wait for people's contracts to roll out, so we can get the opportunity to go in there. I would say, you know, we're on track with our plan to recover, standard grade, more commodity grades, if you will, to use your words, materials, but it is something that will take us, you know, several years to get it back fully, again, just because of the way the business is contracted. Thanks. Just on the cash side, I guess, I mean, with the JV, you liberated some additional cash. I mean, how do you think about the opportunities there over the next year or so? Is there any other opportunities that you would maybe accelerate because of the uncertain demand environment, or do we think about improvement being more organic based? Thanks. I'll let Scott comment on the math. What I would say is, look, we remain confident in our ability to generate sufficient cash flow through earnings and through inventory drawdown and other steps to meet all of our debt requirements and commitments. We'll continue to be opportunistic, as we always have been, in terms of future divestments and opportunities. That really hasn't changed, again, because we have a lot of confidence in our ability to meet our cash commitments. Yeah, and I think, you know, while we'll be opportunistic on, you know, possible other deals, our focus really is on what we can really control. You know, we've been now talking most of this year about reducing our inventories and, and, and harvesting cash from the balance sheet, and then focusing on, you know, cash, our CapEx, bringing that down to $500 million this year, and then, as we put in the prepared comments, lowering even further down to $400 million next year. You know, with that and then the expectation of higher earnings, we do believe that, you know, as we continue to work our way through the second half of this year and then into next year, the, the free cash flow generation will be robust, and then we will use that cash to continue to aggressively lower debt. Thank you. Thank you. Our next questions come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your questions. Thank you, and good morning, everyone. Scott, wondering if you can give us any more color on your comments in the prepared remarks about being able to term the debt out, and remove the refi risk from the next several years? Yeah, I mean, we put the maturities in place that we did a year ago because that's what was available to us. What that yielded was, you know, higher levels of maturities coming up in 2024 and 2025. You know, as we said at the time, we would be opportunistic around what we could do to bring those towers down. You know, as we look at the landscape, you know, we think there could be an opportunity for us to bring those down and really match up the maturities over the next few years with, you know, the, you know, the, the lower levels of cash flow that we're at with the, where the economy is right now, but still very robust. Bringing those down to the levels of free cash flow generation in the next couple of years. That would be straight debt, or are you considering a convertible-type thing or anything like that? You know, our focus in the past has really been around bonds and term loans, and, you know, we think that's been the, the right structure for us from a capital perspective. We've looked at everything, but that's our current focus. Okay. 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, good morning. You, you know, last quarter, you, you had you gave us a bridge to, to, you know, get that extra dollar per share. You had a couple things, M&M integration, you know, unwinding high cost inventory, lower natural gas, but, you know, so, and a couple other things. When you think about that dollar, can you just give us a little bit of color of how that has changed in the sense that, is it you still have that dollar, but there's a bunch more minuses that, that sort of get you to the third quarter and fourth quarter outlook? Mike, you know, if you look at that, we really we were seeing some uplift in Acetyl last quarter when we gave our outlook. We had expected that to probably continue over the quarter. Obviously, in Acetyl, they had a good quarter. They came in at the bottom end of the range, but, you know, not further up in the range because we did see some settling back, if you will, to the low kind of at cost curve levels. You know, in Engineered Materials, as, as I said, you know, what we really saw is we saw a bit more of an inventory impact in M&M. We saw this really continued destocking, and especially in industrial and, E&E. You know, we had again, for the same reasons as Acetyl, when we did our earnings call last quarter, we really were seeing strong order books in April and, you know, saw that as an indication of some recovery happening across the quarter. Again, in May and June, we saw that really not happen. You know, I think, you know, we certainly, while we're disappointed in our performance, I think we, we understand it, and I think we feel very confident, though, in the guide that we've given for the rest of the year. Got it. You know, again, if you take a look at your outlook, the prior quarter, fourth quarter would have been somewhere around $350. I think there was some confidence that, you know, that would be a good run rate heading into 2024, meeting $14, something like EPS. When you think about the new run rate of $3 in the fourth quarter, I know predicting next year is, you know, a little bit early, but how do you think about that $3 in the fourth quarter as it relates to a run rate potential for 2024? Look, Again, just looking at the actions I laid out earlier, the things that are within our control, I think that's a very reasonable expectation. Thank you. Thank you. Our next question has come from the line of Hassan Ahmed with Alembic Global. Please proceed with your questions. Morning, Lori and Scott. You know, in your prepared remarks, you guys talked about the destockings lasting longer than previous cycles. Now, you know, obviously, having lived through 2008, 2009, you know, the COVID lockdown period and the like, I mean, you know, multiple lessons must have been learned. So my question really is that, as you think about the restock, you know, being a longer duration destock certainly seems like a deeper destock, what potentially over the next couple of years, do you think the restock will look like? And I, I guess where I'm going with this is, you know, has the sort of, inventory appetite of your customers changed materially, you know, living through all the craziness of the last decade or so? That's a really interesting question, Hassan. You know, it's, it's always hard to predict some of our customer behavior. I think we are seeing a very deep destock, and I think that, that speaks to the uncertainty people feel about the market. I think, again, especially the uncertainty in Europe and what that means, just not for the European market, but also for the China export market. If we look at U.S. markets, I would say reasonably recovered, probably not a lot of destocking left. I would tell you, though, you know, China, for China is doing okay, but China for export is, is really where that uncertainty lies, and we see value continue to be taken out of the chain, as well as everything into Europe. You know, it's a very kind of unusual global situation that, that we have right now. As a result, I think, and with low prices, people assume prices are staying low, so there's no reason to carry inventory. There's a lot of availability of material, so there's no reason to carry inventory. We also saw post-COVID, how this can change very quickly. As soon as prices start to increase, as soon as we start to see consistent demand recovery, you know, I do believe customers won't want to be back in the same situation they were at the end of 2020, and we'll start to see people wanting to restock. I, you know, I maybe a direct answer to your question, I think it is a deeper destocking because of the accumulation of just global macroeconomics, geopolitics, and everything else. But I have no reason to think we won't see a recovery at some point, and I think-- I don't think people have gotten comfortable with a lower level of inventory once demand comes back. I think there's just a lot of uncertainty about what is that timing of demand recovery. Very helpful. And as a follow-up, on the EM side of it, again, in your prepared remarks, you guys talked about moving from exclusive distribution arrangements in the West to dual or multi-distribution approaches. You know, how do you see the impact of that sort of playing out near term as well as on a go-forward basis? Yeah, I, I think it's really a matter here of, you know, we are such a much bigger company now that continuing to have single distributors in, like, these major geographies is probably not giving us the breadth and the reach to the amount of customers we need to be reaching to generate the new opportunities and volume sales, that we desire to have. This is just about, you know, we need to have multiple partners to really get to the full range of customers and the full range of end markets. Very helpful. Thank you so much, Lori. Thank you. Our next questions come from the line of Kevin McCarthy with the Vertical Research Partners. Please proceed with your questions. Yes, good morning. Just to follow up on the balance sheet discussion. Scott, you ended the quarter with $1.3 billion in cash, and I believe you have another $450 million coming in from the Nutrinova deal. Is it your intention to just continue to accumulate cash to address your senior unsecured notes due in July of 2024? Would you prefer to refinance them over the next few quarters instead of paying them off with cash? Yeah, Kevin, I think, you know, we're not in the business of holding cash right now. We wanna find ways at which to, to reduce that debt as quickly as we can. We still have term loans that we have coming up, and so we can utilize that cash for the term loans. I would also remind you, we do have a $300 million interest payment in the third quarter, so we will use the cash we have on hand for, for that. Then we have maturities coming up still later this year that we will handle as well. You know, we've talked very openly about having cash in other geographies that we need to move back to the U.S., and we're building those pipelines now, and we expect to be able to get that cash back here to the U.S. by the end of the year. Then once we get our systems integrated in the first part of next year, that will give us an ability to operate the company at a much lower amount of cash, probably right around $500 million. I think with that, that's gonna free up a lot of opportunity for us to use that cash for deleveraging, given the maturities we have coming up, plus the term loans we have outstanding. I see. Thank you for that. Then, you know, on a related note, your balance sheet reflects approximately $1.5 billion as the sum of short-term debt and current portion of long-term debt. That actually ticked up a little bit sequentially. I would have thought that it would go the other way with the term loan paydown of $370 million. Can you speak to what's in there in terms of how much you might have drawn on the revolver and what you might owe affiliates at this point? Yeah, it mainly, it ticked up, Kevin, just because of foreign exchange. Mainly the Euro moved up a little bit, but that's the big delta there. Okay. Thank you. Thank you. Our next questions come from the line of Matthew DeYoe with the Bank of America. Please proceed with your questions. Thank you. It seems like a sharp acceleration in the China macro, I don't know, maybe needed to improve the POM and PA66 trade flows. Like, is that, is that right? Does the recent PA66 capacity expansions within Asia, China make that business recovery more challenging? Yeah, look, you know, our, our outlook is really not based on any increase in demand. We have a little bit of improvement in destocking occurring the rest of the year, again, based on the, our, our view of the market. We really aren't forecasting any uptick in demand in any particular region. I wouldn't say, you know, that's needed to meet our $9-$10 range for the year. Certainly, it would be welcome, but I wouldn't say it's needed. I would say the expansions in, in nylon, you know, nylon has always been pretty well supplied. There's been plenty of compounders, there's been plenty of polymerization out there. The expansions you've seen are maybe more on the upstream side, the raw material side of that. I don't see that that really changes our dynamic much around nylon. You know, we continue to focus our nylon on, you know, more differentiation, getting into highly differentiated products, looking for new applications, new, new end markets, that share regain, based on our good customer relationships, especially in standard grade. That's what I talked about earlier, the, the regaining a share over the next couple of years with those, and, and really taking advantage of our integrated value chain and our option to be in or out of the polymerization market, depending on where things are. I'd say, you know, I think we're positioned well, you know, to either make, build or buy it, whatever, whatever works out, and our value really comes from differentiation. You know, maybe if I can give you some examples, because, you know, we've often gotten this question around, you know, nylon relative to EVs. You know, we've recently actually just completed 2 new contracts for, for EV parts made from nylon. One is, you know, for a major OEM, we have a part now going into EV motor mounts, which will use Zytel. Then we have a second application we just finished for the AC compressor bracket, which is made from Zytel, which is going into EVs. Why this is important is, you know, we, we talked about the time of the deal, but, you know, may have gone unnoticed, is there are a lot of applications for nylon into EVs, especially as you think about EVs being quiet. People want less noise, you need less vibration, and polymer parts, and in particular, in nylon, for those that require strength, are great parts to replace metal and other things, not just for lightweighting, but also to give consumers the experience they want from an EV. We're already starting to see some successes using the Celanese knowledge of the EV market and our contacts with those customers, and applying Zytel to those and winning some new businesses there. I appreciate that. Well, I guess I wasn't necessarily worried about the, the 9 to 10 number this year in, in, in, in a recovery. More just, in general, with repairing some of these markets, like, particularly, I guess, POM, because it's, it's not one we have a ton of line of sight into from a supply-demand basis. Is it really just trade flows from China, and China is kind of sitting on the cost curve into Europe, or is there? If that's the case, I guess, what, what reverses that? You know, Matthew, I think it's important that we have a lot of history here in POM, and these situations tend to be temporary, where, you know, our co-producers in the market have made too much material, and, and they move it into other regions, even if they just have to get rid of that material. Our cost to serve in Europe and the U.S. is really unparalleled with our facilities in Bishop, Texas, as well as there in Frankfurt, Germany. With that, our ability to win sustainably has been proven out over time. These do tend to be temporary fluctuations, so we do not expect that this is something that is gonna continue, you know, for the foreseeable future. Thanks for that. Thank you. Our next question comes from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your question. Great, thanks for taking my question. Just going back to the guidance, now the new midpoint is around $9.50. And if you just go through the Q3, you know, that $210-$250, with $230 at the midpoint, it kind of implies around $3 for Q4. You know, you noted that Q4 is gonna be your strongest quarter. Could you just maybe bucket out that bridge between $2.30 and $3 from Q3 to Q4? We can do the math, but I just wanted to, you know, hear it from you as well as to how the two segments kind of play out. Thanks. Yeah, look, I, I would say, I would expect for the year, we've called out Acetyl Chain will be at foundational level of earnings, so you can pencil in $1.3 billion for the Acetyl Chain. A second half, very similar to the first half. Then, you know, in Engineered Materials is where we'll see the lift. About half of that coming from, or maybe even a little more, but probably about half of that coming from M&M. Really, as we continue to regain share, as we continue to move pricing on differentiated grades. You also have the other half coming from EM, as we see the end of destocking, really here in the Americas, and a little bit of recovery in other... Well, not really recovery, but end of destocking in other markets. We'll also get a little bit of, you know, the, the biggest piece of this, though, and a lot of this will be in EM, is the $60 million-$80 million of additional cost and productivity activities that we've undertaken, most of which will show up in the fourth quarter. Again, you'll also have the help in M&M from the additional uplift of synergies in the fourth quarter versus the third quarter, and a little bit of help from lower interest expense on debt paydown. All of those together, you know, accumulate to make fourth quarter, what should be our best quarter of the year. All right, thanks for that. Just as a, a follow-up then, you'll be exiting the year at, you know, maybe a $3 run rate, gets you kinda back into that $11-$12 range for, for next year. Is that the right way to think about it? I mean, you know, are you seeing the, the, the end of this destocking cycle? Was there any risk to that view? Would it be maybe a, you know, an automotive kinda slowdown from the strike or anything like that? Is there, what are some of the risks to, to, you know, maybe, you know, not achieve that level of earnings power as you look into 2024? Again, if I go back to, you know, what I went through earlier, if I look at 2024, you know, I don't. Look, I think that number that you're laying out there is not a bad number from kind of a base. If you look, there are a lot of things, and that just assumes steady demand with, with the end of 2024, which again, we're not, or with the end of 2023. Again, we're not forecasting any great uptick in demand at the end of 2023, we're just forecasting an end of destocking. I don't see a lot of destocking continuing to occur next year. Again, if we look at just those things we can control, we will be in a better position from a variable cost standpoint, as we flushed high-cost inventory out of the system this year. We will not have the inventory, the level of inventory reduction hit next year, which will help next year. We have in the additional $150 million of M&M synergies, and, you know, we have the additional $100 million from Clear Lake assets. I would say, you know, if you take the fourth quarter and annualize it, I, I would see that more as a floor than as our expected level of performance for next year. Great. Thanks. 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. Lori, do you have an updated forecast for M&M EBITDA for the full year? Got the event number? Yeah, David, I think, you know, as we put out the Q3 number, it's another lift off of where we were in the second quarter, which was a lift off of the first quarter. You know, as we go into Q4, as Lori mentioned, we would expect another lift up. You know, that kind of puts you in that range when you add up kind of all of those numbers, somewhere in that $500 million-$600 million range. You know, we're gonna try to get to the top end of that range or even exceed it, depending on where Q4 lands. That's kind of where we'd be. You're getting a lot closer on a quarterly basis as you end the year, to kind of that quarterly accretion level that we talked about last quarter. Understood. Lori, just on the additional $60 million-$80 million of cost reductions, is that permanent? Is it somewhat temporary? A little more color on that would be helpful. Thank you. Yeah, if, if I look at the 60-80, some of it is definitely, you know, 1 time. If you look, about 50% of it is related to production actions. These are things that are focused on the fact that we have lower demand, and so better you know, optimizing when we're taking turnarounds, how we're doing turnarounds. I mean, if we don't need the capacity right, back right away, for example, we can do it without overtime and just take a bit longer to do a turnaround. We are idling facilities, not so much entire facilities, but say, lines within a compounding unit. That allows us not to, you know, staff as much, power savings, et cetera. Reduced overtime, reduced use of contractors, again, really in response to demand. I would say those are 1 time, are temporary actions. They're not things that, you know, hopefully demand comes back, and then these are things that we can reverse. You know, the other half, I would say, these tend to be, you know, a lot of them tend to be small, and a lot of these are one time as well, continuing to really reduce travel across Celanese, which is, you know, worth a few million, reduction in promotional and marketing spend, a few million as well. Again, most of these are temporary. You know, look, there are some things there, which is acceleration of the synergies that we had laid out for the acquisition of M&M. Where we have redundant positions, for example, in the organization, going ahead and removing those redundancies now versus maybe having waited till later in the year or even into next year. You know, I'd say it's, it's probably just guessing off the top of my head, you know, kind of two-thirds things that I'd say are more temporary in nature and related to the reduction in demand that we're seeing in our, in our focus on maximizing cash in this period of time. The other third would be kind of acceleration of steps we had planned to take later in the year and into next year. Thank you. Thank you. Our next question has come from the line of Duffy Fischer with Goldman Sachs. Please proceed with your questions. Yeah, good morning. Could you just comment, have you seen any change in behavior in Polyplastics, since you sold, you know, your half to Daicel? Are they part of the kind of competitive dynamics, you know, issues that you called out in those increased imports into Europe? Yeah, I don't think we've really seen any difference in their behavior. I mean, nothing different than we're seeing in the rest of the industry in response to, you know, kind of the macro conditions that we're all experiencing right now. Fair enough. Either sequentially or year-over-year, what did Ibn Sina contribute to 2Q, and what does that do in the back half of the year? Yeah, so year-over-year, Ibn Sina, that's probably the easier way for me to think about it. You know, 2022 was high, higher crude prices, higher methanol prices. We had a really healthy contribution from Ibn Sina. This year, I believe Ibn Sina is gonna be in that $60 million-$70 million less in contribution than last year for the full year. It's because our, our total for all of the joint ventures is about $100 million less in 2023 versus 2022, and that's the combination of Ibn Sina and the KEPCO, moving KEPCO to a manufacturing joint venture. Great. Thank you, guys. Thank you. Our next question has come from the line of Aleksey Yefremov with KeyBanc Capital Markets. Please proceed with your question. Thanks, and good morning, everyone. This is Ryan on for Aleksey. Just on the... My first question here is, you flagged the $30 million-$35 million headwind in EM from destocking during 2Q. You know, based off your commentary on the call, I, I presume this is something that would continue in 3Q, but, you know, it, is something that you could get partially back in 4Q as, as destocking kind of ends here? I- Ryan, I'm, I'm sorry, you were breaking up a little bit. I believe your question is the $35 million headwind that we had in second quarter, due to destocking, would we expect to recover that in the third quarter or sometimes later? Was that your question? Yes, that was it. Okay, great. Well, I wouldn't necessarily say we expect to recover it. It's a one-time thing. Sometime in the future, you know, do you get some benefit from restocking, as we see demand come back strongly and people wanna return to inventory levels? Certainly. I don't have any idea, you know, when that would be, and that's kind of a hard thing to track. I would expect, you know, third quarter destocking will be a similar level to second quarter in terms of the financial implications. I wouldn't expect a further big pluses or minus, maybe a little bit more down in the third quarter because we'll have more finished goods destocking and less raw material and intermediate goods re-destocking, but not hugely significant. I wouldn't expect a 2nd to 3rd quarter big change relative to destocking. Understood. Got it. Thank you. Just my second question is: you flagged the delayed start up at Clear Lake, you know, due to some component defects. I understand the financial impact of the $25 million, but are there any material costs that go along with this? Thanks. No, it's, it's really the impact of not being able to get our synergies. I mean, obviously, with the lower demand profile, there is capacity in the world, so, we don't anticipate a big impact there. The cost of the site itself is covered by the manufacturer, since the manufacturer is responsible for the defect. Thank you. Our next question has come from the line of John McNulty with BMO Capital Markets. Please proceed with your questions. Yeah, good morning. Thanks for taking my questions. The cash generation, Scott, it looks like you're, pull down CapEx for 2024. Are levers as we look to 2024 that you still feel like you can pull? Is there more kind of to wring out of the working capital side of things? Are there other integration costs that can maybe be pushed off? I guess, how should we be thinking about some of the, some puts and takes for free coming in 2024? Yeah, I think we've been very open about our priority to, to free cash flow here in 2023, John, and that doesn't change going into 2024. You know, we, we put the $400 CapEx number out for next year. That's the first step on the inventory side of things, a $400 million-$450 million reduction this year. There will likely be more opportunity going into next year, just given how much raw materials have come up over the course of the last several years, which we expect kind of volumes to be, you know, at good levels as we finish this year from an inventory standpoint, but there will likely be more value opportunity as we work our way into next year to convert more working capital there. Continuing to focus aggressively on, you know, terms and looking for other working capital opportunities, the teams are, are really focused heavily, on that cash side. When you kind of then layer in the elements of controllable EBITDA growth that Lori has mentioned several times on the call, we feel very good about the opportunity to continue to drive free cash flow going next year. Got it. Okay, fair enough. Then just a question on, on EM's differentiated products. It sounds like so far you haven't seen much in the way of, of pricing pressure there. Do you expect to see any as you kind of look out over the next, whatever to call it, 12 months, just given the level of deflation that we've seen across so many industries so far? No, John, not really. like I said, we've seen some, some demand softness just based on our customers', demand softness for their products. Again, we would expect that this is temporary, and that will come back. We've not seen, as we typically don't see, a lot of pressure on pricing for our differentiated products. Got it. Darryl, let's take one more question, please. Thank you. Our final questions will come from the line of John Roberts with Credit Suisse. Please proceed with your questions. Thank you. How is the Food Ingredients business performing into the deal closing? We've got some pretty broad weakness in the Food Ingredients overall market. Yeah, I think our Food Ingredients is performing, you know, as expected and as, as we laid out at the beginning of the year. We really haven't had any issues there. Yeah, John, that business tends to be pretty resilient, through most economic conditions. Then with the recent rise in oil prices, is there any risk to the Singapore unit being curtailed later in the year if oil continues up? Look, I would say no more than it ever is. I mean, we constantly flex our Singapore and our Nanjing units, depending on economics, depending on regional demand and the cost to supply those regional demands. At this level of crude pricing and coal pricing in China, I don't see that dynamic changing significantly. Thank you. Thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Brandon Ayache for closing comments. Thank you. We'd like to thank everyone for listening in today. As always, we're around for any follow-up questions you have. Darryl, please go ahead and close out the call. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and enjoy the rest of your day.