Celanese Corporation (CE)

Investor Day 2018

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May 1, 2018

Does this work okay? Good morning, everyone. It feels a bit like a funeral in here, so I, And I hope you guys will chat it up a little bit and ask some questions. This is actually Celanese's 100th birthday. Believe it or not? And it's a 100 pretty impressive years. Having said that, it's going through a lot of change. We'll talk some about that change as we get started. Maybe I can kick it off with a few housekeeping items. Your exit is when you turn around, of course, there's 2 year left. And In the event of any kind of emergency, the, banquet manager will instruct us on what we should do. But the key thing to remember is stairwells AB and F. So if we're F for any reason to leave. They'll tell you we'll go down stairwells ABRF. Restaurants are kind of diagonally to your left. When you go out here, and, we'll take a break before we start the innovation showcase. And after that, showcase, Just to complete this geography lesson, the Innovation Showcase is in on the next two rooms here. And you'll be in there shortly. As we go through this process, I am going to, make a number of projections about performance. And that's going to be based on our best estimates of what the world looks like. We're always diligent with that process, but I encourage you to remember that things can happen outside of our control as much as we don't like that. So be thoughtful about these numbers and use them appropriately. Starting with the agenda, I'm going to kick this off in just a moment. And I'm going to give you a brief overview of Celanese's performance for the last, 6 years and a bit of our history with that. And how we think we're in place today to deliver a earnings CAGR of about 14% over the next 3 years in a free cash flow CAGR of about 13% and how we expect to end at $11 per share in that range in 2020. Scott Sutton will follow me, up to the stage after that. Scott's going to start with a discussion on acetate tow, and we thought it was important to help you understand while we're so confident that we can keep those earnings flat and through this timeframe and how we also still have optionality to replicate something similar to what we presented to you last June, with a Blackstone venture. Excuse me. After that, Scott, we'll move into ensure materials business. I think the story we have there is a very unique story, and it's probably the highest growth story within the chemical sector. Scott will give you a lot of details about that. Specifically, what makes our model so unique? How we draw value in that model that others can't drive and how we expect to be able to continue to do that as we go through the next several years. Scott's going to talk about 5000 projects in 2020 and how we make that possible. And he's also going to introduce and talk to you about a concept that we use always internally, which is called embedded growth. Todd Elliott will follow Scott. Todd, of course, runs the Seagulls chain. And in that, Todd's going to take you through all these fundamental elements of that business probably most understandably the supply and demand scenario that's, you know, in that business. And talk about some of the misconceptions people have about the volatility of that business. So we'll try to take you through that. That tees up you will, a great environment for us to drive value for a lot of years going forward. He's going to share specific impacts of the China regulatory environment. He's going to introduce our own internal model as well that we call the activation, network or network activation, which is how we measure the degree of interactions we're having commercially in the marketplace to drive value. It's about partnerships, volume and growth, and expected margins in that business. That should get us to 9:30 ish. Hopefully, a little bit before 9:30. At that time, Scott Sutton will get back up along with our Geece Thomas, our Chief Technology Officer, and they will share a little bit of highlights about the Innovation Showcase. And I'll let them do that in a few minutes when they take the stage. After the Innovation Showcase, Scott Richardson will, will step up our CFO and take you through sort of the roll up summary financials of all that information that you've you've heard cumulative cash flow, operating cash flow of 4,000,000,000 free cash flow of 3,200,000,000 ish kind of range. How we intend to reuse that cash, how we can return, tend to return a portion of that to shareholders. So that's it. Then we'll wrap up with Q and try to get you out of here a little bit after lunch. Okay. So it is our birthday. So you have to be nice to us today. Special Day. 100 years ago, the Dreyfus family, you know, formed Celanese Corporation and cellulose acetate, really to be in the yarns or fiber business. And I won't spend a lot of time on that, but to say that the, that family established, which is still quite famous today, a base of philanthropic and engagement that's really pretty impressive. And the core of that, the core of giving back in service has been a real core of our, our company ever since. We are focused on being a good corporate citizen. Spend a lot of time and energy and effort thinking about what that means, both in terms of how we conduct ourselves, what we do internally and externally. We're very committed to our employees, to their growth, their well-being, to their personal development to see that they achieve everything they wish to achieve in life. And we work very hard to create an environment that's very welcoming and inclusive for all. Celanese proudly lends its voice to speak out when we think folks are being taken advantage of. We support equality and they're shape, and we are very active in doing that around the world. This this sort of cultural service may be an unusual way to talk about a company, but that really drives our performance because we feel that service to one another. If you look at it, some easy ways to talk about that safety environmental and community work. We reduced safety incidences 45% over the last several years. Process safety instances, these are things that lead to big events. So these are leading indicators by 84%. That's top decile performance around the world for any industry, but especially the chemical industry. Environmental of 40% reduction in our waste intensity, as waste per ton of production, 31% reduction in greenhouse gas emissions. We've been received a lot of awards over the years for our energy efficiency efforts, much of which our productivity centered around. In community service last year, the employees at Celanese volunteered to 170,000 hours in the communities. That's 2 days per employee per year. Tackling things as far reaching as orphanages in China, a refugee crisis in Europe or Celanese has up in Germany in a real big way to bring a lot of industry around trying to create jobs and, and, gainful opportunities for those men and women that find themselves in Germany. To work in the U. S. Primarily inside the classroom and, you know, intercity schools, and around the classroom helped to support children. That process of service, you know, you really, you really see being applied as well to what makes us so structurally unique. Sony says exceptional positions in our technology. We are truly technology leaders in these little spaces that we're in. The polymer breadth that we have, as Scott will take you through, is unmatched in the industry. As are our global networks, that puts us in a position where we can respond to things in a different way, than others, whether that's understanding really product and demand flows around the world, the capabilities to produce or not produce, how we look at and assess information from those individual companies. Is different, and it lets us do unique things where the others can't. We grow by leveraging everything within our company, our assets, our technology, ourselves, you know, what, who does what, when the company is a real important aspect of what we, what we present. In that leveraging process, you know, we're finding the ability to translate the success to more and more things. And so you hear a lot about translation as we go into the technology translation is easy to understand. There's also a commercial translation. We'll give you some examples of that. And net of all that, it's all about cash. So our ability to generate cash and use that cash in a very, very efficient way. It's led to some pretty strong growth numbers. It's led to real expansions and margins for us. Strong growth in earnings, strong growth in free cash flow. And with that, enough cash to return a fair amount of cash, $3,000,000,000 since 2012. To shareholders. If you take that a step further and just look at sort of the expectations of the corporation, we put out, that's sort of the stage actually in 2015, and put out a growth plan that was, pretty ambitious, a double digit growth in by all metrics. We introduced a pipeline model, which people didn't really understand or didn't really have any real true value for at the time, coming from a reference point of 300 new products being introduced per year. We talked about our ability to increase our cash generation and use that through dividend growth and share repurchase. If you don't know us, every one of those metrics has been met or exceeded over that period of time. Everyone. In spite of about $150,000,000 of headwinds that came to us, it was totally unanticipated. That performance leads to strong earnings, obviously, and strong free cash flow. We're on pace to be well above $9 a share this year with earnings. And we're on pace we think to be in the mid 900 $1,000,000 kind of range of free cash flow. And with that free cash flow, we've been able to do very thoughtful investments. 2 categories of investments we've been really involved in. 1 is incremental expansions and energy and things like that. Since 2012, we've invested about a $500,000,000 in those sorts of things and has generated about a 24% return than that. As we look forward, we'll share more details. We expect to double that rate over the next 3 years with the opportunities in front of We've also gone to a position of really being, focused on acquisitions, we moved to that position, and we developed a lot of efficiency there. Over the last 15, 16 months, we've done 4. Those four acquisitions have brought in about $600,000,000 of revenue. And have given us opportunities for 1800 different projects, programs out there. So it has brought in capacity, it's immediately accretive is also driving great growth opportunities for us as a company. We've also been very predictable in returning our cash, to shareholders. Now we've been on a run rate of well north of $700,000,000 for the last several years. Our current dividend is about $280,000,000 annualized you should expect, and we'll talk more about share repurchases in the future. We'll be staying at that kind of pace as we go forward. And that has been recognized by the by the market. So thank you very much. Celanese has operated with a TSR about 151 percent over the last 5 years. That's two times, anyone else, in the industry, any of our peers, or the Dow Jones Temple Index. If you look on a 3 year basis, it's about three times. So we're very proud of this, but we're also very proud of the fundamentals that got this made this happen. And we're very confident as we apply those fundamentals through the next 3 years, you're going to see the same kind of results. So let's shift forward just a little bit. We are very well positioned for growth over the next 3 years. In fact, the world has really changed a lot in just three years. We've changed the Celanese and the world has changed a lot. The escalating need for solutions out there for our products is, is just growing and it's growing at a pace that frankly is outstripping even our demand to satisfy. The increasing customer complexity that's felt, also comes back to create unique opportunities for us, and we'll share a lot about that as we go forward. Demand growth in all of our businesses you know, is there. And the capacity utilization rates for all of our businesses are getting pinched. Now what that really means, it doesn't mean people run out stuff, but it means that the opportunities in front of you start to accelerate. You have more choices to make good decisions on where you invest your money, the things that you do, in how you bring value to shareholders. We are the broadest positions in the world. I know it sounds silly to you guys, but you'll see and a bit how we measure that, and our ability to lever the sprawl portfolio with the networks we have and our global reach is unmatched. And it's unmatched commercially, and we draw more value than anyone's commercially for doing so. The models that we use are getting better and better. Put a lot of energy and effort, working to make sure that we're more and more efficient with how we approach the market, how we develop our products, how we get them in the market, decisions we make. We constantly push and pull audit and assess and do it again and again. That development of those models and that agility puts us in just exactly the right spot as the world gets tight. Because we have the ability to do things. Others can't. We have the ability to process information and others can't, and we can respond faster than anyone to those opportunities that are out there. And lastly, it builds this opportunity to grow. Celanese has not been in the growth business. We've been in the make it better business. If you look at our revenue, it's been fairly flat. If you look at our volume and the volume numbers out there, you'll see we're not really actively pursued. I'm setting aside the info in it. Any kind of real volume addition. It's coming to us today in a way that's really positive. By that, I mean, it's not, not disruptive. And so we have built into this model, modest growth, but nonetheless, you'll see it's very, very accretive growth and something that's going to add material to earnings. Talk just briefly about each dynamic before I turn it over to Scott. If you look at engineering materials, We have, for a while, been able to differentiate ourselves in the marketplace and actually have a rate of growth a bit above the market. So you need to think of sub 5%. It's probably more like 3% or 4% based market growth in this business. In all of these product lines, we're entering a period of tightness. In most all of these product lines of period of tightness, which again gives us commercial flexibility, gives us confidence to price, gives us confidence to get returns that makes sense. But what you guys don't see and what Scott will share more with you on is what we call embedded growth. Embedded growth is our ability to go into a model of a vehicle and change that same vehicle 1 year to the next. In a material way or modify home appliance. So it is the rate of change to address the needs of customers that really draws that embedded growth. I'll give you one example. Scott will give you several If you look at year to year comparisons first quarter to 1st quarter in automotive, the industry grew 3.9% per year. We grew 24% volumeetrically. Of that 24%, part of that was M and A. Part of it was M and A, about half. So we've got 3 times the rate of growth. We apply this across every business we have across every consumer good out there that uses materials. That's what we see. And our machine lets us go tackle those things. So we have the ability to grow, and we think we'll continually have the, continue the ability to grow at a pace much faster than a general industry grows. That really rolls through in Engineered Materials. We expect about 2020 to earn over $900,000,000 of EBIT per year in this business. We're able to maintain our margins, the embedded margins, our margins inside the company at about 20% and we'll take you through, how we get to that number. We expect high single digit volume simultaneously 10,000 projects, and we're expecting to do a couple of transactions per year, like we've been doing. You see we broke this down into 3 categories, pipeline. It's about $130,000,000. You guys understand the pipeline. We're introducing a new concept for you guys, we call it technology programs, but these are areas of focus for us. Really it's a pipeline concept where we're pulling out a specific market area going after we'll give you some examples of that. And the acquisition should add about $80,000,000 over that time period. In acetyls, it's a pretty similar story in many ways. This is a business that has had a very low rate of growth, low on average versus materials, 3% to 4%, but it's been very steady over time, very steady over time. It's industry that classically operated 85% to 90% capacity utilization and at high industry margins. And then China showed up with the vengeance in 2008. 2000 age 2013, there was a flood of just plants built in this, in this market space. And drove down capacity utilization down into the low 70s. Demand didn't change. Chucked away, chucked away, chucked away in that period of time. What we've seen is the continued growth in demand in the, in the really absence of any capacity additions, we have pinched that business. So we're in the upper right hand side of that, of that curve. Businesses tied. That's helped support some degree of margin lift. And you add on top of that what we do to enhance that you know, you're seeing today operating margins in the 20% range. There's a new thing going on though, and that's called China reform, and there are a number of regulatory initiatives in China across China that we're very well aware of down to the plant by plant level. And we believe that process is going to also further reduce the available capacity in China. So Todd will take you through all of this in a few minutes. And help you understand why we think that business is going to be tight and why we think it will remain tight for a very long period of time. When you look at that in terms of power of this business, we're expecting to go from $575,000,000 in 20.17 to also above $900,000,000 of EBIT in this period of time. Volume growth is about 150 of that, and that sounds like that's really horrific. It's really not. It's only about 3% to 5%. But we've not been growing volume in that process and this volume is right here for us today. Industrial utilization is really the benefit we see of lifting these, you know, a more respectable margin, I would say, over a period of time in the business. So all elements of that get lifted a little bit, if that makes sense. So think of that as pricing as well. Should add $90,000,000 And then the model that we use, and we talked so much about that we outlined well to you last time we were here, we'll add about $80,000,000 over that period of time. So $25,000,000 to 30,000,000 per year, we think we generate out of that model. That gets us to 900. 20% average margins for that period of time and the internal investments we're doing have at least a 25% return. Before I turn it over to Scott, let me just roll that up really quickly for you guys. We have been on the path a very consistent earnings and cash growth. And everything I see about where we are today points to the fact that we're going to continue to do that. The business is better. The world is better. The markets are tighter. People are more disciplined on how they approach those markets. We're different than anyone else in how we do this, and there's no reason we're not going to keep that unique position. And in fact, it's unassailable in so many ways. We're going to be able to generate these numbers. We'll have a 10% CAGR on EBIT growth for this period. We'll have 11% CAGR I think on revenue as we go through it, free cash flow should be about 13%. And we plan within this to return $2,000,000,000 to shareholders. Which would be a $1,000,000,000 to share repurchases and a $1,000,000,000 in dividends in that period of time. Okay. You guys okay? Alright. Scott? So thanks a lot, Mark, and good morning to everybody. First of all, I'm really pleased to address, you know, our acetate tow business right up front because we really do have better storyline here. I mean, this is a solid cash generation business that's been in decline. That we've been able to stabilize. And so what we'll put forth here is really a base business plan that keeps earnings flat through 2020 compared to 2017. And we'll also show you some strategic upsides that are in the business that can add to that two $2,500,000,000 of value that does sit in acetate tow. What I'll say is that this is a much calmer marketplace. And it's calmer because the tow inventory reduction, both inside and outside of China, well, that's behind us. Also, the acute reduction in demand in China because of austerity measures that were applied there. Well, that's behind us as well. You know, also the pretty significant reduction in imports of TOW in China. Well, that's all done too. And the reduction in imports happened because the acute reduction in demand that I talked about and also there were capacity additions really tend to put China to be in self sufficient. So those imports have come down to 10% or 15% of what they were you know, just a few years ago. You know, our China dividend, which by the way, represents about a third of our earnings in this business, it's going to grow. And it's gonna grow because of a final expansion that's being in China. You know, we actually have 3 joint ventures in China, and one of them is called our Zhuhai joint venture. It's doing an expansion, this is likely to be the last expansion that'll happen in China as it goes on its path to being self sufficient in the supply of tow. It'll start up, this year. And after that happens, you know, Celanese along with its joint ventures, we'll have about a 70% market share in China. So we will get some positive value creation out of this. 2nd, we do have some innovation in this business as well, really in two areas. The first area is in the heat not burn segment. So this is a collection of devices and tobacco sticks where the tobacco is actually heated up, but it's not fully taken to the point of combustion. So when you don't take it to the point of combustion, you don't have a lot of the compounds of concern that come out of but you still get the nicotine delivery. So this segment is growing very fast. The tobacco sticks use a special form of tow that we supply. We're already in this commercial business, and that brings higher value, higher pricing as well. Also, Celanese has its own filter and it's actually based on some of our engineered and carbon, it fits to a normal cigarette. It also reduces the amount of compound of concern that you inhale. And we're in this commercial business as well. So there is some upside coming from innovation We also have a lot of cost savings left or a lot of productivity left in this business as well. And, you know, through the years, I mean, Celanese has been good steward of going out and getting productivity. In fact, we've averaged about $100,000,000 net productivity every year. Year and forward, maybe it's closer to $50,000,000 of net productivity, but the productivity in this business is a big part that. And there's a, a couple pieces of work left to do. There's still cost savings available in our over and how we use raw materials in our energy and intensity and efficiency in this business. That's worth about $10,000,000 per year of earnings. And on top of that, we're going to close an asset early in 2019. In fact, we'll be announcing the closure of that at shortly after Investor Day. So that closure, along with some associated activities, will give us about $30,000,000 per year back into earnings. So the sum of that productivity yields us $40,000,000 to $50,000,000 of earnings by the time we get out to 2020. So that's on a run rate basis. So when you look at the business plan going forward. It does look flat in terms of earnings. And, yeah, I do think there'll be a little bit of price erosion there'll be a little bit of volume erosion. But those three things that I just talked about, the increase in our China dividend the innovation we have in the business and the productivity we have will offset all of that. And then on top of that, we're going to be working on strategic options, right? One strategic option that we tried, I think everybody's aware of that, it was the joint venture of our global business with Black owns acetate tow business. And that would have yielded significant shareholder value. That transaction basically did three things. Number 1, there was a lot of synergies, particularly from cost savings in that transaction. But number 2, because of levering it up and cutting an initial dividend, we were able to monetize a good bit of that $2,000,000,000 or $2,500,000,000 of present value that sits in there and use it for other things within selling these. And number 3, it actually provided a long term exit path for the business as well. We could have spun it or IPO ed it once the, you know, the business was corrected. So this was really a novel type of transaction that could have added a lot of shareholder value. But we still have options to do that. In fact, there's 3 options out there. And the first one really is doing co producer deals, either on acetate tow or acetate flake, acetate flake is a precursor for acetate tow. And really what that would do is it would accelerate the closure of additional assets and maybe even provide some more asset closures above what's in our base plan. But we're also looking to evolve that number one item into number 2. And number 2 is to consider doing a completely global manufacturing joint venture. And in that scenario, you'd still have independent marketers But what you get out of it is a lot more cost synergies. Again, the ability to, close down more assets still having the independent marketers, and it wouldn't be subject to regulatory approval either or not much. And there's a third option. And the third option is very similar to what we try to do with Blackstone. It really is a full functioning global joint venture where you don't necessarily change the number of marketers in Europe and therefore regulatory approval is likely doable. So I mean, look, in closing this business, what I'd say about right, is we're working all of these items, right? And we continue to make progress on all these and we'll keep you posted on where we come out. Okay. So that's our acetate tow business. You know, what I'll do now is, you know, move on to a powerhouse business in Celanese. And that powerhouse business is our engineered materials business, right? We like to call it EM. And so this business, it operates in a robust market space. And we apply the broadest solution set in the industry. And we do that through a novel model that matches up that solution set to those robust and we're going to review a subset of those initiatives today. You know, what I'll say about this business, it has a track record of earnings growth and particularly since we implemented a new model in 2015. In fact, this business is approaching being able to add about $100,000,000 of incremental EBIT every single year. And, you know, like Mark said, I mean, we came to you at our last Investor Day and we made certain commitments, and we believe those commitments are met. The first commitment was to make sure that earnings grew double digit across that planning period. And so they've grown at upper teens in fact. So that commitment's met. The second one was to grow our project pipeline or our opportunity pipeline at 20 percent a year. Well, in 2015, we were able to win about a 1000 project which was up from 2014. This year, I expect us to win about 3000 projects. The 3rd commitment was to grow the business through bolt on acquisitions, particularly in nylon. Since that time we've made 3 significant acquisitions that were generally focused on nylon business. I mean, today, we're a player in nylon business. And then finally, we said we'd expand our joint venture earnings. Our polymer joint venture earnings have grown. But there's more work we can do here, and I'll share some of that when we get to the growth initiatives for E. You know, I started out this section by saying that we operate in a robust market space. But that may not be perfectly apparent depending on what lens you look through. And if you look through a macro index type of lens, you don't see that because all those growth rates are down below 5% closer to 3%. As Mark noted in his opening. But our customers operate in that space too. And because of those lower growth rates or those modest growth rates, They're trying to differentiate their products all the time. And that differentiation opens up an embedded market to us so that we can grow much faster than those macro indexes. So let me give you an example of that. Last week was China Platts. And China Platts is one of the largest polymer shows in the world. It was held in Shanghai aside from attendance being up about 25% from the last time that we held, that China Platts was held, And aside from the fact that Celanese launched 4 new products there, you may have seen the press release for this just issued last night. The request for differentiation and supporting customers in that differentiation was significant, almost overwhelming. So that differentiation by customers, it leads to shorter life cycles, and it leads to increased functionality in their products. When you have shorter life cycles, and increased functionality in their products, you end up with a lot of complexity. City gives us really an abundance of opportunities, right? Here's a couple examples. Right? If you look just in the U. S. Auto market and sort of average the number of new model launches that there were between 2010 and 2017, it was about 38. If you look at the expectation for 2018 through 2021, that number jumps up to 57. So, Celanese has the opportunity to be a bigger part of each new model log Even though by absolute terms, the macro index says this business is growing at just a couple of percent. We'll triple that. It's sort of the same thing. If you look at the number of connectors, electrical connectors or electronics connectors in a car, in 2007 versus 2017, that's tripled. Again, Celanese EM has the tunity to be a much bigger share in each model going forward. And that abundance of opportunities is showing up all over our project pipeline. So what you're looking at here is just a dissection of our project pipeline. It's shown proportionate to the number of projects that exist per market segment. So this really is growing, helping grow Celanese a lot, and there's no cap on entitlement here because of that embedded market. Okay. All right. Look, it's great to have, you know, a robust market space to participate in, but we also need to have the broadest solution set to match up against that robust market space. For Celanese, this is really the matrix of being the broadest polymer supplier in the industry. It's also being the number one expert at functionalizing those polymers. And it's also being an expert at enabling our customers to use those functionalized polymers. Right? I mean, 1st of all, we are the leader in terms of being the expert in the largest number of engineered thermoplastics. So if you think about the universe that exist in the engineered materials engineered plastics world, you might can count between 25 and 30 polymers. And so Celanese is an of those, meaning we produce the polymer itself. So we're much more than just a general compounder. And if you look at the next 3 or 4 leading competitors in this space, maybe they're an expert in 10 of those polymers. And if you go to the next 4 or 5 leaders, maybe they're an expert in 5 of these polymers. So Celanese is an expert in double what the next leading competitor has. And I would even add on top of this that those competitors tend to run their businesses differently. They may run it separated by polymer or market space, and it may not be coherently globally connected. And that's another advantage that Celanese has. Look, this is a clear competitive advantage for Celanese that others don't have. And then we're able to multiply that breadth of polymers by being an expert at functionalizing those polymers. So when I say functionalize a polymer, I just mean tailor it to perform a specific duty or make a specific solution. So let me give you an example of that, right? I mean, some customers don't want a plastic that has any hint of odor like a plastic. So we're able to functionalize a polymer, so it doesn't smell like a polymer. Same thing. Some customers want to use one of our materials in a part that moves, but they don't want to lubricate that part. So we're able to functionalize a polymer to have a low coefficient of surface friction, so it doesn't require any lubrication. Right? And here's where it gets really neat, right? We're able to apply multiple functionalizations to 1 polymer And in fact, that's what we do in most of our projects. And if you look at one of the examples that's on this slide, the cosmetics dispenser, right? So a normal lipstick holder, right. The first functionalization we do is reduce that coefficient of friction on the surface so you don't have to lubricate the moving parts. But at the same time, most cosmetics are really acidic, right? So again, we apply a functionalization to that polymer to make it resistant to those dispensers out of really thin wall parts, we're able to functionalize the polymer to have high strength and high stiffness. Right? So if you step back and think about what I said in the last couple of minutes, so we have 20 polymers were an expert in. We have roughly 20 different types of functionalizations we're an expert in. But our breadth of solutions is much more than 20 times 20 because we applied multiple functionalizations almost in every single project. We have thousands of solutions to solve customers' problems, but it doesn't matter that we have thousands of solutions, we still have to teach customers how to use them. So we have to enable customers across the whole value chain. Supplier. We normally sell material to a molder who may injection mold and makes one part He sells that part to a tier or a system supplier who assembles multiple parts into an assembly. And then the OEM takes assemblies, puts it together, sells it to the end consumer. And so we use our competencies across that whole value chain. Take a design competency, for example. We do mold flow design. So we get in there and figure out how the polymer flows in the mold and what the gating is, those kind of activities. We also do structural design for the tier supplier. And then we may do thermal design of the parts or assemblies of parts, for the, for the OEM. So just to summarize that broadest solution set, right? We're the expert in the largest number of polymers, expert in the most functionalizations, expert at enabling customers to use them. That's why we're number 1 in terms of having a package of solutions. But yeah, again, markets robust, yes, we're the, you know, broadest solutions supplier out there. But you also have to have some type of novel model that's able to match up that broad solution set to all those robust opportunities I think we do. This is our project pipeline model. We work in this model and on this model, every single day. If you ask where the real intellectual property is in this business, it's really contained in this model. You know, here's, here's how it works, right? There's a sea of opportunities out there. And We're meeting with customers every day. We're having technical seminars with customers. We're meeting them on sales calls, but nonetheless, we're sitting across a table, table from them. So we go through a process called customer options mapping. And the object there is to discover as many opportunities as we can in their ecosystem and match it up to our broad solution set and create projects. Then we take those projects, we put them into programs, We prioritize them, we look for trends, and then we translate those trends to other parts of the us. So let me spend a couple minutes talking about some of the details of how that process works. So right after we go through, customer options mapping, really on the next day, we take those projects and we screen them. And we screen them through what we call an expert committee. And it really is just that. It's a it's a global team made up from business, commercial, manufacturing, technology, And they really have one job. And that one job is to determine can we win that project? If we believe we can win it, we keep it. If we don't believe we can win it, we don't. Then on the very next day, we take that program, that project and we put it into what we call a program. And a program is nothing but a unique way to focus on some attribute that's going to give us the most growth. So we have programs that are centered around products. We have programs that are centered around technologies. We even have programs that are focused on markets and might set up a program just to address the needs of one customer. So what you see here on this slide is our appearance program. So within that appearance program, there's projects from auto, appliance, personal care. Right. We really are market agnostic, and we're also product agnostic in how we, address a particular solution, right? And then we look at trends and translate. And translation has become a real game changer for us. So when we first run a set of projects, or a program, you get an initial penetration experience curve. It's like the lower left S curve on this, this chart. But we're able to take that experience and translate to different areas. Some places we may translate to is a different customer set. We may also translate that experience to different geographies, or we may translate that experience to different devices or different parts. But what you really end up with is a growth curve that just goes on and on and on. Again, there is no entitlement cap on how we can how we can grow this business. Look, in the innovation showcase, you're going to get to experience a translation room where you see how this process works. And on top of that, I encourage you to go look at what we call the project progression poster session that we'll have because we'll talk about a specific example of a project of how we translated it to other devices and parts and customers. Because we're successful at translating, we really are present everywhere in your life. I mean, this is an example of the last time you went to the grocery store. And I can tell you that Celanese engineered materials is present in the product you are buying. It's present in the packaging on the product It's present in the mechanical and electrical equipment that's in that freezer or refrigerator that's in that supermarket. We're even present on those glass doors because we make an anti fog film. We're present in the lights in that freezer were present in the lights in that store. I mean, I'll tell you, we're even present in the frame of that shopping buggy. And in the wheels of that buggy too. And if you were to think about those people shopping, wearing their shoes, as well. We provide polymers that are actually spun that is right? They have electronics on them. We're present in that. They're wearing cosmetics already showed you how we're present in that. And we helped them get to and from that grocery store as well. We really are present everywhere. Okay. So we have a robust market space We have the broadest solution set in the industry. We have a novel model to match up that solution set to those broad, robust opportunities. That in itself is enough to have this business grow at a pretty significant clip. Right? But on top of that, we have very specific growth initiatives. Those growth initiatives really supercharge. The growth in this business. And what I'm going to do, I'm going to cover 6 or 7 of those growth initiatives for you now. But the number one thing that we do is work on this model, not just in the model, We do the hard work necessary to make sure we can scale this model so that by the year 2020, we are able to juggle those 10,000 projects that Mark spoke of. And we're able to win 5000 of the Remember, this is our IP and this is where we want to spend, the most time, right? In 2015, we put in the model that I've been to driving to you. And by 2016, we had wrapped it around 700 team members. In 2016 2017, this model was running. And you see the volume that's been delivered by it. And here we are in 2018. And it's time to do some more work in the model. And we're going to come out with what we call EM2.0, where we extend and do. Remember, I spoke of programs, how we arrange things in those focus areas. Well, we're going to take those programs and the resources that support those programs and make them infinitely flexible. So as soon as we see a trend, we can create a program to address that trend and then we get the run out on that, that translation curve. And that's pretty unique because it's not many companies that have a global scale of business and an organization, this big, that can actually change the way the organization works overnight as the market pulls on us to be able to do that. Okay. We have a clear growth initiative in our medical and pharma business. Right? We're present in the body in terms of implants in the body and drug delivery devices that are put in the body as well. We're also present in all kind of drug delivery devices such as inhalers and insulation pins, pins that are outside the body. We're present in a lot of different kinds of medical equipment as well in the doctor's office and in, and in hospitals. We have a unique way to approach commerce though in this pharma business and that unique way to approach commerce is growing. And the way that works is we typically charge an upfront technology access fee just to provide enough material to do R and D. And normally that kind of access fee is a 7 figure type of fee. Then when we move forward, we actually sell on a per device royalty. So we used to sell on a dollars per kg but we don't do that anymore, right? There's a, there's another set of value that we can go after. And because of that different model, this business grows about four times the underlying macro growth rate in the medical and pharma area. So look, I encourage you when you go to the Innovation Showcase, there'll be a poster session on medical and pharma, we will take you a lot deeper into our pipeline and what the growth opportunities are. We also have a clear growth initiative in energy storage, where we're typically present in this business is in the battery separator between the anode and cathode through which ions flow as a battery operates. We're also present, by the way, like in trays for batteries and covers for batteries and parts that are that are around batteries. But our model here is also a bit novel. I mean, we try to contract with 100% of the membrane suppliers in the world so that our material becomes the gold standard. But at the same time, we're doing that, we're out trying to talk to every OEM in the world as well because of our market reach to convince them to have the pull through. But because of doing those things, our business in this area grows about three times what you might expect by the underlying, macro, macro market. Look, we also have a lot of clear growth initiatives around technology programs that are based on customer pull and I have a couple examples of that. We have a functionalized set of polymers for cookware. And so in this cookware, the food can be prepared it can be frozen, it can be cooked, it can be served, It can be reheated, it can be put through the dishwasher, and it can be used again. So we're solving a unique customer challenge there, right? We also have a functionalized polymer that's used for conveyor belts conveyor chain systems and things like food processing plants, even mining and material handling, it's what you see in blue every bit of that conveyor belt is our material. So we functionalize the polymer to do a number of things, but certainly to have low wear and require no lubrication. If you've ever been in a food processing plant or mining, you know, there can be a problem with having lubricants or even the water that they use to lubricate system. Look, we have lots of these. There's a lot of technology pull, but the key thing is it's got to be based on pull We identify that pull through that customer options mapping process and the trending we do through our program. Okay. We've been able to grow in doing bolt on acquisitions. And I said at the start of this that we took a commitment at the last Investor Day to do bolt ons and nylon, we did that that came in the form of 3 companies, software, Nillet and Omni. They're predominantly in nylon, in fact, Nillet was 100 sent nylon. So yeah, we're a nylon player now, but we got a lot more than just nylon. First of all, we acquired a project pipeline. And remember, this is a project based business. We acquired about 1800 projects with those acquisitions. But more important than that, we acquired more project generation machines, especially when you integrate them into our model, which is what we've been working on. And in addition to nylon, we're now in the thermoplastic elastomer business as well. And that's going to be a future area of growth. In fact, that's going to be a targeted acquisition area for us also. The other thing that we got with all these bolt ons was a lot of excess capacity. Sometimes these guys didn't operate their plants on 20 fourseven and they certainly didn't operate it under an optimized global supply chain like we have. So we've been able to support some amount of our organic volume growth through these acquisitions. And we continue to engage with a lot of companies here. But I want to assure you that we're going to do this in a very value creative way. And here's how we think about a bolt on acquisition. If we look at it and believe we're going to pay some multiple of EBITDA we target a 10 on average with this whole program. If that's $200,000,000, our hurdle rate sort of is in 2 or 3 years from now, That business ought to be worth $400,000,000 to $600,000,000 of value, right? That's how we think about it. But these, these acquisitions do come in at a lower percent margin, but you shouldn't worry about that and here's why. I mean, if you just looked at our business today, call it, a 20% base EBIT margin. If we didn't do any more acquisitions, that margin would certainly go up over Tom as we add scale to this business and we're more successful at bringing in a lot of incremental projects. So we go out and do a bolt on acquisition, changes the mix a little bit, perhaps that margin drops by a percent or 2, but there's a lot of synergy value in that acquisition. So now you've got synergies working for you, where you're expanding the margin, what you acquired, You've got your base business margin improving as well. It gets back to 20%. We find another good opportunity for Celanese's capital to double or triple it in 2 or 3 years, we do another bolt on. Okay. So also in our innovation showcase, I encourage you to go to the poster boards for M and A and integration because you'll learn a lot more about successful at potential bigger strategic options in doing acquisitions as well, right? So this is a part of our growth strategy. And we're going to focus this effort, and we are focusing this effort. And some of the representations in our pipeline now, we're looking at acquiring businesses or companies that are in those clear growth objectives that I laid out. So going back to medical and pharma and energy storage, we have a pipeline of those companies. We're also interested in acquiring companies that are in bigger growth geographies. We've really grown our Asian volumes, but we really haven't grown our Asian assets proportionately. So that's an area that we're looking at. You know, I said earlier, we have the broadest polymer portfolio in the industry, but there's still some things that we don't have. We'd like to have fluoropolymers. We'd like to have polysulphones as well. So those are pipeline opportunities that we have. There's some higher technology areas that I'd like to be able to leap frog into. And one of those is into 3 d printing. So we have a pipeline of additive companies that we're looking at as well. We already supply a little bit of that into the 3 d industry, but this is an opportunity for us to jump in in a bigger way. You know, another untapped area for growth is within our joint ventures. And what we can do with the joint ventures is convert equity income to fully manage business. Right? I mean, these are good polymer joint ventures, but they certainly don't benefit from running our model or the scale of our business. And the equity income that we get from these, of course, it's after tax, but when a any kind of enterprise value to EBITDA calculation is done, I generally feel that value is not taken into account. So there's a lot of value to get just from doing a transaction here. And what I would say is we're in discussions on all of these on how to do something, right? I can't promise specific success here, but we'll keep you posted as we do make progress. And we have a complimentary growth area in this business. If you look at the Palm landscape, it's changed a lot. And, demand has continued to grow. A lot of that is due to Celanese's business. Supply or large increments of supply have really not come into the mix. In fact, if you look out into the future, you really don't see any major projects and palm. Palm is our largest polymer. By next year, this industry will be running at about 100% capacity utilization. So Celanese gets the opportunity to do 2 things. 1, we can expand our margin here But 2, we can invest some of Celanese's cash in very high and fast return, projects. Okay. So when you stack all those initiatives up, I mean, Celanese really is poised to grow. And if you start at the bottom green stack, that's worth about $130,000,000 of EBIT, and that's really the project pipeline growth from working on the model going back to our discussion of how do we continue to scale this model And what's behind that and what's underpinning that is today we're running 5 expansion projects. One of them is a polymer expansion project for them are compounding expansion projects. By the time we get to 2020, will either be running or have completed an additional 15 more projects, again, both in polymer and in compounding. Then you get to the orange block. And again, this is also project pipeline growth. It's just that it's a little different. It's focused on some of those higher technology areas that I called out as growth initiatives. Again, it's backed up by our work in medical, pharma, energy storage, and a number of those other technology growth initiatives, such as the Cookware. And finally, you get to the blue on top. This is the $80,000,000 of EBIT that's contributed through our bolt on activity. To add that much, we have to do 1 or 2 bolt ons every single year, and we probably need to get one of those joint ventures restructured as well. But when you add up all of that, all of that growth You get about $300,000,000 of additional EBIT by the time we get to 2020. So that takes us from $600,000,000 last year, up to about $900,000,000 of EBIT by 2020. And in conclusion, I would just say, look, this is a really great business. I mean, we have a robust market space We have this broadest solution set that we put it through a pretty novel model that the whole organization and the whole company is organized and enthusiastic about. And we make sure we can match that solution set up to the broadest number of opportunities that we can find from customers. And on top of that, we have a bunch of key growth initiatives. So here's what you should expect. I mean, you should expect us to keep growing this business at double digits every single year in terms of profit. And you should expect us to be able to do that in a way such that we keep the margin a respectable level. We think 20% is a good place for that base margin. And underlying all that, the organic volume growth should be, upper single digits as well. Okay. So that's Engineered Materials. So with that, I'm really pleased to introduce Todd Elliott. Todd is our Senior Vice President of the acetyl chain, and he'll take you through another powerhouse business. So powerhouse, we need to come up with a name for our acetyls business. So save that thought. Let's see if we can invent a new tagline for acetyls by the end of the day. One thing I was going to shock Surby over, Mark mentioned that this year is the 100 year, birthday of the company. So I was going to ask this audience to seeing happy birthday to the company Never mind. So see, she's shaking her head quickly. So we'll save that. But I'll give you an alternative. I would encourage you to go check out the Celanese website. And our corporate communications team put together a really neat retrospective on the early days of the company with original stories features of our original products and some interesting print advertising back from the early days of the company and this retrospective entitled celebrating our past, but the website quickly turns to new things. You heard several examples from Scott, new developments, new customers, new applications. And this part of the website exhibit is entitled imagining the future, which I like. I like that theme of imagining the future. And I would ask you with respect to the acetyls business, To start using your imagination, start thinking about the future earnings power of this acetyls franchise. The main areas of focus that I will cover today are that our industry fundamentals are sound and are improving with solid demand growth and reforms in China. Celanese has the leading acetyls business in the industry, and we're constantly working to improve this repeatable model and expand our network and create more options from that. And third, We are positioned for further growth Our business has delivered on our commitments over this last strategy period. We've progressively increased earnings from $375,000,000 in 2012 to over $700,000,000 this year, growing earnings at 10% per year and consistently generating EBIT margins in the 12% to 16% range. And we continue to build on our advantage positions. This team is very focused on this new strategy period to deliver additional growth And while we have a broad product range in acetyls, I'm going to focus on acetic acid and vinyl acetate which make up and influence a large percentage of our business. Starting with demand there's a nice diversity to the end use to serve by these chemistries, using the acetic acid to make acetate esters. Using acetic acid to make teratolic acid, which is then used to produce polyester for fibers and for beverage containers. Our vinyl acetate is used to produce multiple products like PVOH or EVOH for the paint adhesives in food packaging areas. To EVA and emulsion polymers for various film applications, also for paint coatings powders and also engineered fabrics. If you add up all of these applications, this represents over 14,000,000 tons of acetic acid demand and over 6,000,000 tons of vinyl acetate consumption. So plus 20,000,000 tons are represented here in this industry. So if you take a 3% growth rate over many years, that rate of demand today represents about 600,000 tons of yearly demand increase. That's very solid demand growth in this industry. The capacity picture was also balanced until a rapid overbuild in China occurred during the 2008 through 2012 period. When China pursued a cheap coal easy financing, fast growth phase. If there was a cycle in this business, that was it. The only one back then a capacity cycle, basically an overbuild that put new units into China. Industry operating utilization rates before that buildup we're in the 80% to 85% range. And then after that buildup dropping to the low 70% range. The acetyl industry and all these in uses have steadily grown out from this point. There have been limited capacity additions since 2013, and no major expansions are underway. So if we now look into the end of 2017, beginning of 2018 period, We estimate industry utilization rates at about 83%, expanding to the upper 80s by the end of this decade. This is a significant improvement built on limited additions and sustainable and solid demand. In addition to relance cape. We can consider this timeline going back to 2006 and see the growing emphasis in China on emission controls and cleaner air. We now observe central government policy and provincial and local rules and enforcement aligning. This also goes with a greater focus and obligation to deliver economic performance and returns. We're already seeing impact from these reforms. Our Celanese team is very well represented in China, deep experience, broad exposure throughout the country. And we've conducted a deep review of the major environmental reform policies expected to impact industrial operations. If you read the summaries from the 19th people's Congress in Beijing earlier this year, the absence of the word chemical is noteworthy. There's a shift in focus to consumer goods, to biotechnology, to advance products like aerospace, aerospace, and automobiles, and IT. There are numerous references to air quality, quality of life addressing the needs of, of, urbanization. So if you take our research, all of our interviews, and we did a plant by plant examination, we would point to these 4 environment environmental policies is being most impactful. And we've plotted the acetic acid and van units against these regional reforms. Shandong province will regulate new and existing industry parks. The frequently cited 2+26 plan aims to reduce emissions and control pollution in Beijing, Tianjin, and Hebei regions. The environmental law shown in blue protects cities along the Yangtze river, essentially banning operations within 1 kilometer of the river. And the Jiangsu-two sixty three plan, which aims to reduce outdated chemical capacity, move chemical plants to industrial parks, control pollutants, and closed plants with safety issues. There's going to be a lot of different outcomes associated with these ranging from restructuring to, pollution control upgrades required to force relocations, assuming the economic still work and assuming they can get permits, And in other cases, there will be outright closure. So we expect older, more polluting, and those plants that are not in an industry park eventually to decline. So we've already seen changes. There's a a convergence of energy policy and environmental policy. In fact, in the latter half of twenty seventeen, and start of this year, there have been energy curtailments as the country balances power sourced from coal fire operations to natural gas, thus limiting natural gas, available for chemical operations. Another example, we believe there's one major plant in the Jiangsu region that must relocate, but has not yet been granted an equivalent permit. As these policies take hold, we'll expect further changes. If you overlay this China reform dynamic onto the earlier global utilization picture, This will likely affect utilization conditions increasing from the earlier 83% and starting to push up closer to that 90% level. Though some period to period variation will occur, we expect a structurally better industry. Now turning to the 2nd focus area, and that is taking our leading acetyls network and doing more with it. We call that working on and in our model. So I'm going to provide several examples of how we utilize and build from our position and constantly work to improve this so that we continuously add capability and options. Starting from our methanol integration and ranging into acetic acid and a vam into emulsions were represented in every region and hold the number 1 or number 2 position. We go to market representing the products vertically and or look for value capture moving to the next derivative, for example, taking to see to cast to the VAM, VAM to emulsions and out to that customer base. This broad reach and integration supports unequaled Market Knowledge and most importantly, optionality. Technology is important to us. It's a key aspect of our leading position. We have a deep history here. This has allowed tremendous capacity expansion for low capital generating returns over 25%. Our conversion efficiency is best in class. Here, we highlight Carbon monoxide and methanol conversion yields. These are the 2 main inputs for acetic acid. This capability is worth about $15,000,000 per year on an equivalent world scale unit basis. In addition to this, we have industry leading capital efficiency. We can build capacities for about half the value of our competition. This is a tremendous advantage when you consider the scope of process units for an integrated acetyls complex. This represents 100 of 1,000,000 of dollars of advantage. These continuous advancements in process technology and operational excellence underpinned two projects we just announced last night, which I'll highlight in a minute. So now taking a look at feedstock optionality. Our unique position also extends into this space. We produced acetic acid in the United States on the Gulf Coast in China and in Singapore. We practice similar technology in all of those regions. However, the critical CO feedstock is derived from different sources, from natural gas on the U. S. Gulf Coast, from coal, and China, from oil derivatives in Singapore. As the value for oil or coal or gas fluctuates, Celanese has the real time option to shift our rates around to flex production and move that, that output. We've done that over the past few years have generated over $50,000,000 of benefit since 2013. Our team is also focused on commercial flexibility, both from a customer perspective and also on the supply side. We value our customers We work very hard to be the most reliable supplier. We also need to generate the right returns on the business. As the industry fundamentals have changed, We've adjusted our ratio of commercial positions to be more freely negotiated versus formula based. This action provides margin uplift. We also worked multiple options for structural supply. We invested in methanol integration a few years ago, We've added different sourcing options for methanol for that critical input. And now we're working across the ethylene spectrum to layer in different terms and mechanisms to capture value. These commercial flexibility efforts also support margin improvement. So I've provided some examples of how we utilize technology, feedstock optionality, and commercial flexibility within our network to unlock additional value. These are examples or branches of our global operating network. We continuously work to add to these branches with more customers, with more partners, with more options for production, more options for sourcing, more flexibility. So we add these dimensions or these nodes, as we call them, to create greater degrees of freedom with rigor and structure. This is our model, a picture of our model. Our cross regional teams meet daily and review significant information coming from the field Look at that data. We look at customer demand, customer inventories. We then assess supply options, trade flows, evaluate costs and margins. We bring those insights into these daily or weekly meetings to determine the best path forward for our commercial and manufacturing decisions. For example, whether to change price or to shift volume around, or to work the derivative option through the chain. And then in parallel, work the commercial alternatives for all of those. This work informs and enables network activations. As we test and measure our network, we utilize a key performance indicator to gauge the traction. We call this a network activation. We take the insights captured from the daily and weekly reviews and consider all the options. The significant decisions taking taken out of that process or what we call a network activation. Some examples are when we choose to lift or lower production rates. Or change sourcing or modify our supply geographies. When we add or reduce supply chain nodes, like terminals, for example, or make pricing moves. These are all what we call network activations. As the industry landscape has gotten better and is approved, this optionality becomes even more important as it generates new value for the business. We ramped up this capability over 2017, increasing our activations by 50% versus 2016. So wrapping up the 2nd focused area of expanding and generating more value with our repeatable model you see that strength and performance in margin development. Building from an 8% to 12% EBIT margin range during a period of overcapacity, making choices on cost and site rationalization during the last 3 years, moving up into the 15% range as we worked on enhanced flexibility, improving our insights and decisions, more activations. And now building from the improved fundamentals and Celanese generated degrees of freedom, we see margins exceeding 20% like the 1st part of this year. And then we estimate margins in that 20% range for the period out to 2020, representing a further lift and reflecting the strength of the Celanese acetyls model. This also gives us So the acetyls team has a series of projects ready for implementation and have grouped them into 3 categories through the 2020 period. We have available capacities today. We also have a series of technology oriented expansions that we're initiating. That fall within the 2020 period. And we're also working an effort to link other molecules with customers through our global network. There's a 4th category where we assess other projects beyond 2020. These are all strong investment opportunities and will contribute to volume. And earnings growth through the decade and beyond. Leading off of vinyl acetate, we're ready to expand our vinyl acetate capabilities to support customer needs. We had previously communicated our 150,000 ton expansion of Clear Lake. That project remains on track for a Q4 2018 startup. We just announced last night an additional 150,000 tons of output improvements. This is a direct extension of highly advanced process technology and control capabilities. Our team worked with a leading external agency on advanced reaction measurement and controls, And we can apply that to our 5 global van plants. And that can generate an additional 150,000 tons of output and we'll match that up to when customers require it. Although these processing capabilities are highly sophisticated, The Celanese capital cost is less than $15,000,000, another very attractive high return on capital project. We're also pleased to announce yesterday, a further lift in our Clear Lake Texas acetic acid output by 140,000 tons. That takes our global capacity to over 3,400,000 tons. This is the technology based upgrade and the capital requirements are also minimal. We'll implement this over the 2019 timeframe. Given our leading position in acetic acid and the strategic nature of the product for sales and also for derivative supply, We've started the initial work assessing a large scale or large scale additions needed after the 2020 time frame. Together, these just announced VAM, debottlenecking efforts and the acetic acid expansion plus the original Clear Lake Texas expansion, will generate additional sales volume of over 400,000 tons and will contribute over $100,000,000 of EBIT through the 2020 period We see over 40 companies in the acetyl space across multiple products and multiple geographies where we believe linking our network can provide improved access and reliability to global and regional customers. It's complex to produce and store and transport and service global and regional customers on a 20 fourseven basis. We can do that because of what we have because of what our network offers, we believe we can facilitate these connections and provide access to these molecules. It also provides a vehicle for growth for selling these acetyls. At this stage, we've identified about 200,000 tons that could be added to our network. So think of it as about a 5% volume increase. This is also an avenue to build stronger relationship potentially create alliances or partnerships and also some reveal, M and A opportunities. So the combination of the strength of our model and our relentless focus on adding capabilities and options to support decisions are designed to lift margins, generate earnings growth, creating a significant step up in the earnings profile of the business. And now with these additional steps to add tons, with limited capital, we ramp up that volume growth to over 400,000 tons of new contribution or 3% to 5% up on volume through 2020. Although there'll be some variation in EBIT margin, we see another lift into that 20% range So recapping the 3 main takeaways. We see structural improvement in industry conditions, supported by sustainable growth and environmental reforms in China. Our team is focused on expanding our network and our degrees of freedom with our unique and repeatable model. And we're ready to execute on these projects that I just outlined. These smart capital growth steps both for capacities and access to new molecules yielding returns over 25%. Our leadership team aims to deliver for shareholders 3% to 5% volume growth and lifting EBIT margins into the 20% range. So very pleased to project a level of earnings performance tracking over $900,000,000 in the acetyls business by 2020. Thanks very much. Look forward to updating you on our progress. And now we'll transition to our innovation showcase. I'll hand it over to Scott and Regis. Yes, thanks a lot, Todd. And so, you know, I'm pleased to have the opportunity to introduce for Geese Thomas who is our Chief Technology Officer. But hopefully, what you've seen so far through Mark's discussion Todd's presentation and my presentation is that we really do take a purposefully unique approach to commerce. And we believe that yields unique shareholder return as well. So what Regis is gonna in introduces to the innovation or the technology showcase is going to show how we're unique broadly. In other words, it's not just unique technology. It's a unique commercial process. It'll also be unique in manufacturing and safety and will be unique in the functions such as HR as well, because that's the only way that we can continue to deliver outsized result is to be broadly unique. So that's what the innovation showcase is really about. So with that, Vergitte, Thank you, Scott. I'll keep this short. Don't want to keep you from the most exciting part of the morning today. As Scott just mentioned, over the course of the next hour 30 minutes or so, what we expect you will experience is a lot about how we operationalize the differentiated business models you heard us talk about this morning. You're also going to hear a lot about an experience firsthand, how we take Celanese's broad, but very unique customer solution set. To solve some of the toughest customer challenges that exist out in the world today. And then lastly, most importantly, We're going to give you some exposure and experience interacting with our employees at every one of our stations. And hopefully, you'll be able to infer and observe the differentiated talent and the unique culture that we have in the company, which has enabled all the growth over the last 3 years. And so much more that is yet to come. So I just want to give you a little bit of logistics on what to expect next, each of you, if you turn your badge over, you should see a group number that you've been assigned to. We'll have you split into 9 groups of about 12 folks each. You will have a Celanese group leader who will be waiting for you outside this room who will accompany you and sequence you through the different Innovation stations, we have a total of 8 stations, including the translation room next door. Your group leader will ensure that you're at each station for approximately 10 minutes and progress here to the next station. With the exception of the translation room, we'll have you there for a little longer period of time for about 15 to 20 minutes. But I want to encourage you all to have a lot of session and dialogue ask a lot of questions, engage with our team. And we are expecting you back here in the room at approximately 11:10 am. So if you can take a 5 minute break, find your group leaders outside and then rejoin us at 11:10, we'd greatly appreciate it. Alright. Alright. Welcome back. I hope everyone enjoyed, the last and a half or so. I have the enviable position of being slotted right between the innovation showcase and Mark doing Q And A and lunch. And as I was told by one of, our sell side friends earlier, I must have done something really awful to Mark to deserve this slot. But actually, I like being positioned here. And I have to admit as I get started, what I'm going to talk to you about over the next 30 minutes or so is going to be a little bit redundant. Maybe a little bit boring because it's really going to be focused on 2 things: cash flow, cash flow generation, and shareholder return. Those two things, And, you know, if I think back to those two elements, that's really kind of where we've been focused since the day Mark started with Celanese in 2012. And I remember sitting in a room with other members of the leadership team then. And Mark looked around, he said, you know what? There's really only three things that are critical for us. First, Making money. Make more money tomorrow than we made today and keep that going for days beyond and focus really solely on shareholder value. The second, take care of each other. Come together tight as a team. Doesn't matter if we work in a function or in a business. But work tightly together as a group to be focused on shareholder value. And the 3rd, we need to have fun while we're doing it. It's pretty self explanatory. Those three things, if we really think about where we've been as a company in the journey that we've been on, that's where our focus has been. Focus on generating cash and how we deploy that back into our business in a way that creates shareholder value. And Scott and Todd have talked this morning, a lot about the uniqueness of our business models. But I want to spend a few minutes to talk a little bit about something we like to call our financial leadership model. If we think about what that model is, it's really a complimentary approach to how we deploy cash based upon the generation of value coming from our businesses. And really, there's 4 very simple principles. That we align ourselves around. 1, that we say, that we do what we say we're going to do. We meet the commitments that we make to you, our investors. The second, is that we drive capital allocation where we're at in the life cycles of our business, but that we're constantly evaluating where the highest returns are. 2, that we are never five with where we are from a capital structure perspective and that we focus on our balance sheet and we focus as a finance team around how we can also drive cash flow and returns. And the last is that we drive cash flow to support growth in our businesses, and M and A as those opportunities present themselves. And we create flexibility around our capital structure that allows us to be positioned when opportunities present themselves. You know, our ability to do this has really led to, us being able to exceed the commitments that we made, back in 2015, whether it's EPS, or cash flow, M and A, what we've been able to do from, cash return to shareholders or on our balance sheet to become investment grade. We were able to check the box on each of these items. And in most cases, exceed the targets that we outlined back two and a half years ago. And it is this focus on both commercial and business model success. Combining that with our financial leadership model that has led us to be able to overcome some headwinds that we've had. You know, we did not achieve this plan the way we set out to do it. You know, we were able to adapt at various times, you know, as we saw headwinds coming in our acetate tow business. We were able to make some changes, grow faster in Engineered Materials. We were able to redeploy cash back in terms of buybacks to be able to drive a consistent growth of EPS and free cash flow. And that consistent growth of EPS is something we're really proud of. Despite the fact that we have had some variability in some of our businesses, and that we've had to overcome headwinds, we've been able to consistently grow our earnings per share and also consistently grow then free cash flow. You saw a bit of a blip up in 2006 that really came from one time items. If you take that out, we've been a steady generator of cat on an upward trajectory, really, in excess of what we've been able to do from an earning standpoint. And that growth that we've been able to achieve from free cash flow has come from us being able to be creative around our capital structure and what we've done around our balance sheet. And our expectation is that this year, we'll generate around $950,000,000 of free cash flow, and be able translate those earnings that we saw from the first quarter results and we expect to continue into the balance of the year, into cash. This focus on cash, is something that for us is critical, is job number 1. We're a little disappointed that it's not yet reflected in the equity value, however. And if you look at free cash flow yield, this is a very similar story than what we've shown in the past. We still believe there's opportunities here and that there's an attractive value proposition based upon the consistent cash generation that we've been able to deliver over the several years. And we And there's several areas of discipline I want to kind of drill into a little bit. The first is around working capital. You know, we saw working capital move up a little bit in the first quarter. That was not unexpected based upon the strong business results and the strong business results we saw, particularly in Asia. We are however, are tenaciously focused around what we do around working capital. We have a consistent metric that we use across all of our businesses on a percentage sales basis to make sure we're looking at things on an apples to apples basis, but that we also look at trends. We also focus around what we've been able to do from an entitlement perspective around working capital as a percentage of sales and focus really around how we constantly drive for lower working capital. The second area of discipline is this culture of productivity. And productivity is the hallmark of what we've done for many, many years. We, it is not something that's new for Celanese to talk about productivity. Now our productivity this year Scott mentioned, we expect around $50,000,000 in net productivity. That gross productivity numbers around $120,000,000, about half of which comes from manufacturing. Which again is about the same level of value that we get from productivity for manufacturing. And it's amazing to me when I go to our site, And I sit and I talk to the team, the first, order of business has always saved me in stewardship. The second, and it never fails. Is really around how we drive productivity. Now productivity has evolved for us. It's not just about cost reduction. It's not just about cost cutting anymore. It's really about how we drive efficiency more and more in our operations. A great example of this is we had around 400,000 tons of compounding capacity in our Engineered Materials business in 2015. And through a series of steps, some technology related, some supply chain related, some mix related, we were able to achieve 460,000 tons of output from those same assets in 2017. So a 15% increase in the capacity in our engineered materials compounding lines in a 2 year period of time. Now it didn't happen overnight. It was through a lot of planning, careful planning, and working together amongst a large group of people to be able to achieve that productivity. But it doesn't stop there. You know, one of the elements of the synergies that comes from our engineered materials acquisitions that we're doing is around manufacturing. And you take the same tenants that we used in our own kind of base business assets and you apply that to what we're doing in acquisitions and you get a lot more output out of those assets would drive some of that synergy value that's able to lift the margins of that business up to the levels of margins that we expect. Broadly in Engineered Materials. The balance of our productivity comes in the areas of supply chain and business enterprise, And again, that has changed a lot over the years. The business enterprise bucket used to be a lot bigger number, and that was during periods of time, where we were creating and setting up our low cost shared service centers in both Budapest and Nanjing as an example. But we're still driving opportunities for improvement in those areas. It's just change and adapted. Good example of that is over the last year, we have localized the site leadership position in both Budapest and in Nanjing. We get the benefit of the reduction of expat costs that comes from that. But we get functions and is able to drive leadership at a more local level. So again, the benefits of having someone who knows selling these really well, but is much more locally connected than an patent employee. So we get the benefit of that personal development that hopefully compounds itself over time. Another important area of discipline is around and, you know, given the fact that we have had some headwinds in our business, it's been an important value driver for us to look at our financial organization and make sure that we're being really smart in the areas of both debt and interest, tax, and pension. In the first one, our interest cost was $220,000,000 in 20.11. And through being able to take advantage of the low interest rate environment, but kind of having a plan and setting out, a series of optionality steps here, we've been able to lower our interest expense by almost a $100,000,000, in 2017. That has been an important lever in us being able to generate free cash flow over the last 5 years in excess of earnings growth. The second is around tax. Our tax rate was 21% adjusted in 2014. Last year, ahead of U. S. Tax reform, our tax rate was 16%. Those were all controllable, thoughtful steps that we took to ensure that we are taking control over our own tax rate and making sure that we're looking at opportunities on a real localized level to, to ensure that we're optimized and connected to where commerce is being done. And that started with really sitting with our businesses, focus on where growth was going to come from and really be positioned from a tax perspective to lower that rate. On pension, you know, we were looking at about an $800,000,000 unfunded deficit in 2011 and through just a series of consistent and thoughtful steps, including in Q4 last year, taking out a euro bond that allowed us to, fully, kind of pre fund our U. S. Pension, ahead of U. S. Tax reform. So it really took this collaboration between our tax department, our treasury team, and our accounting team really looking and working about kind of where things were going and take opportunity. It was a no brainer. From the perspective to get us, the full flexibility to pre fund that pension. These steps in this concept of discipline has allowed us to be able to generate cash flow that has allowed us to really return cash to shareholders in a way that exceeds we made a couple of years or a couple of weeks ago, we're going to pay out about $280,000,000 of dividends this year. We expect, that to continue. And I'll talk about that here in just a second. If you combine that with the share repurchases done. And we did a $1,000,000,000 of repurchases over the course of 2016 2017. We have almost returned about two and a half times, that cash to shareholders than what our peer averages have been. And that is an important tenant for us. And I go back to how I started this. It's about generating cash and creating shareholder value. And this was, for us, an important hallmark for what we did have done over the last several years. And that has led to industry leading shareholder returns. And this is something that as we as a team look at this, and we reflect on what we've done over the last 5 or 6 years. This is an important, metric for us. And it's something that the team, and I know the group that you met with over there, and hopefully you saw the passion that came from our team in the showcase. There's a lot of really interesting things that are going on in our functions and our businesses, but it's really focused solely on shareholder return. And I think that's reflected here in what we're doing from a business model perspective and from a financial model standpoint. But where we've been is one thing. Where we're going is even more important. In the plans you heard this morning, we have about $900,000,000 of EBIT that we expect to generate in Engineered Materials in 2020, coming from project pipeline, the technology programs, as well as M and A. The same amount from acetyls, $900,000,000, largely from leveraging what is a very uniquely positioned business model. To drive value, take advantage of our geographic reach, our unmatched value chain, and the fact that we have competitive intelligence that's well ahead is able to make quick and snap decisions. And the last is the stable cash generating business of acetate tow, which we expect to hold flat at around $300,000,000 of earnings. And that creates business earnings of greater than $2,100,000,000 in 2020. That gives us a lot of money to deploy cash. So if you think about Mark Top open by talking about $4,000,000,000 of operating cash flow that kind of fifty-fifty. 1st, returning cash to shareholders. We expect through this strategic timeframe to return about $1,000,000,000 back to shareholders in the form of dividends. So $280,000,000 this year, and we'll increase that over the next couple of years up to $1,000,000,000 over the 3 year timeframe. The other areas in share repurchases, $1,000,000,000 repurchase program between now and the end of 2020. The balance of that is going to be spent on organic growth in M And A. Over the last two years, organic growth in M And A has actually only than about a third of our cash deployment. We look at that being about a half as we go forward. And a lot of that is because of the growth programs that Scott and Todd discuss, but it's also about the robust project pipeline that we have of organic growth projects. Our prioritization of, cash deployment has not changed. This is the same chart we've shown for the last several years. We still look at organic growth first. We look at M And A. But repurchases and dividends continue to be something we want to be very and deliberate about in terms of returning cash. If I break down that CapEx component, our CapEx levels have been around 2 $50,000,000 over the last several years. About $125,000,000 to $150,000,000 of that is maintenance CapEx. So you'll call it roughly $100,000,000 of growth CapEx over the last several years. $300,000,000 at $350,000,000 CapEx levels. That amount doubles. Maintenance CapEx is going to remain relatively flat. So that from 2018 to 2020 represents about $600,000,000 of specific investment in growth projects. As Scott and Todd outlined a few of those earlier, today. If I break down those and I'm going to give 3 examples here. The first is in acetyls. We have, a debottleneck project that costs, you know, a few $1,000,000 we get about a 1 year simple payback on that project, something that's really interesting. The second is a typical, investment in a new compounding line, call it your project B. That project tends to cost us about $4,000,000 to $5,000,000 Scott talked about having about 15 of those in the pipeline over the next several years. We get $1,000,000 to $2,000,000 of earnings from each of those, depending on mix, sometimes higher than And the third is really what I would call more of a, a hallmark productivity project. We have one of our, our core legacy strong strategic assets here in the U S, low cost natural gas, but we're still able to drive energy reduction projects that have about a 20% return. These are projects that we see as very low risk. It's on a strategic asset. It's at a low point for U. S. Natural gas, and it's something that makes a lot of sense for us to continue to invest in. These are three examples of many that we have every year. And we have a robust process that we have internally where we look at and evaluate all the projects that we have. We review, as a leadership team, every project, of around a $1,000,000 or more. And it's something where we talk about it, we dialogue it, we come up with ways of which we can make that project better. And we find ways at which we're constantly trying to challenge the economics and find ways at which to expand those returns on all the process that we have, whether they be cost reduction projects or revenue generation. And this has led to in this diligence and this rigor around discipline of returns has led to an extremely high return on invested capital over the last several years. As we look through the strategic period of time through 2020, we see that maybe coming down slightly, but still being in around the 18% range. Based upon the bolt on acquisitions that we've outlined, as well as the project pipeline, that we see implementing during this timeframe. And with that, and the strong cash flow generation, I do want to highlight that we still have leverage capacity if we need it. This isn't the priority. But with $3,000,000,000 of free cash flow generation expected during this timeframe, a $1,000,000,000 going to dividends, $1,000,000,000 going to share repurchases that gives us surplus cash that we've earmarked for, bolt on M and A of about a $1,000,000,000. At our current leverage ratio, given the earnings growth that we've outlined for you today, that would give us about another $1,000,000,000 worth of room. We have roughly around a $1,000,000,000 worth of room today, in our leverage that we could lever up and still remain investment grade. And again, that gives us, you know, around $3,000,000,000 of room if we would need it. Again, this isn't where the focus is. The focus is on using our free cash flow. To continue to invest in the business while we do have room. And I highlight that because we are going to be looking at the balance sheet over the next year or so. We have, one of our euro bonds coming up in 2019. So we are going to be in the market. We also had the $800,000,000 of pre payable debt that we had outlined, from the acetate tow joint venture transaction that we were planning to pay down had that transaction gone through. So we still have that as flex flexibility for us, and we'll continue to look for opportunistic ways to continue to improve the balance sheet. As I said before, we have lowered our interest costs by about $100,000,000 over the course of the last 6 years. Now there's probably not another $100,000,000 tranche here, but we're still going to be focused around how we can drive cents per share to the bottom line, by looking at our balance sheet. So if I start to summarize kind of what we've heard over the course of the last several hours, we feel like there is a very clear value creation path. And if I just kind of go step by step through that one more time, Acetil's has outlined $150,000,000 of growth, coming from volume. That $150,000,000 of growth does seem on the surface like a big dumber. But it's really us growing with the market. Market growth of 3%, which is something that's historically been there, and it's not something that we see changing, but it's us holding our share through that market growth over the next 3 years. That's what that $150,000,000 comes from. The second and third really are how we leverage this unique business model that we have, the breadth that's really unparalleled in the industry to take advantage of changing utilization environment, largely in China, but impacting the world. And then the Engineered Materials Growth story, which is really about kind of more of the same, driving pipeline growth, continuing to increase our project wins, driving to 5000 by 2020, improving our win rate up to 50% from 45% today, and then also leveraging our technology programs, of which you heard about several of, earlier today in the showcase. And then the last piece is doing continuing the acquisition path that we had before. That's how it breaks down. That's what how the $600,000,000 of EBIT growth breaks down. And as I look at that, and I step back and I look at it from a real strategic perspective, it's about 3 businesses: acetate tow, a stable cash generator. Engineered Materials, Scott call it a powerhouse, but it's really a business that is systematically and meticulously driving projects that we can deliver value from. And then Todd's business, which is really uniquely positioned to leverage our technology position, leverage our global business model to generate, high levels of returns over the next several years and kind of grow with the marketplace. And those three things will yield earnings per share of around $11 by 2020, which equates to about $1,200,000,000 of free cash flow, which is a 13% increase over where we were in 2017. $3,200,000,000 of free cash flow cumulatively over this period that we can then deploy to cash. So double digit CAGR in EBIT growth, double digit CAGR, top line growth, double digit CAGR CAGR and cash flow growth and $2,000,000,000 of cash redeployed specifically for shareholders. That's our plan. And we believe by combining these strong business models, combining our financial leadership model, this is a very achievable plan, And based upon, hopefully, the folks that you met in the showcase, you know that we have the team in place to go, go do it, a team in place that's very uniquely positioned has a passion for driving shareholder growth for Celanese. So with that, I'll invite Mark up to close us out and take us into Q And A. Thanks a lot. Thanks, Scott. So, I don't want to spend a lot of time doing this, but a few comments here. You you've heard us walk through this in a very systematic fashion. And you may not be used to people speaking quite so bluntly, but we're quite confident this plan is going to be delivered. The foundation work and toad business that, Scott Sutton outlined is there. We have control over the variables we need to have control to maintain that business. We still have a lot of optionality there. So I will be disappointed if we don't find a way in the next, over this next period of time to really introduce to you some optionality in that business like you have 4 that will help us monetize that and create a pathway to the future to eliminate that as a risk that you folks may feel. Scott also then took you through the EM model. It is stunningly simple in a lot of ways. We have the broadest portfolio, the most depth in terms of how we apply these materials. It is an unassailable position, practically speaking. We don't have competitors. And we do that because we care about a $100,000 deals. This is a series of stack up of small opportunities that we're able to go get, and it really is almost unlimited for us. So there's no doubt in my mind it's going to be 100, 100, 100, 100 plus plus plus in that business. We also have chances to and opportunities to expand that business through M And A, some of which is counted here, but only some of which. Todd then took you through the chain business. And I know it may be a bit counterintuitive for you because a lot of folks have felt like this is a very volatile peak to trough kind of business. It really isn't The data doesn't show that. What the data shows is a history of a business that actually has been very well managed. With the exception of one time period, a very unusual set of circumstances, a flood of the market based on a hope and a dream that didn't materialize and will not replicate its again. So that business is just going to shore up. And the 20% margin that we put up there is our margin. It's not the margin that competitors would see. We can tell you that last year, and this was a pretty good business for us. Last year, the major players in China were all losing money. Last year. Today, they're probably just hitting double digits return. So strong business, strong foundation, differentiated in many ways, and a real contributor, also with ways to bring in stranded molecules, all a waste for us to do more there to make sure we can maintain this business in this state for some period of time. If you roll all that up, in this process, What we've done here is just in a real simple way, we've looked at equity value, market cap, So we, we took the current multiple, current necessarily meaning this moment in time today, but a multiple over the first quarter of this year and applied it simply to 9 dollars, 10 $11, 9 dollars, $10 11 in there. You know, when you run that up, we'll be at $150 a share in 2020. That's a $20,000,000,000, and you've heard me talk about $20,000,000,000 in that process. What you need to know is what's not included in this is the share repurchase. What's not included in this is optionality for us to do other things. Scott took you through one example of that optionality before that was a $1,000,000,000 to $2,000,000,000 value accretive deal for us. We're gonna try to do that again. It does include optionality for us to do a bigger deal in one of these 2 base businesses. It does include optionality for any kind of transformational deal, all of which are in front of us to look at and consider. What I can tell you is we won't do anything that destroys our ability to make that 11. And we won't do any deal in any way, shape or form that would disappoint you in terms of the return or risk profile corporation. It would all be accretive. And we have 3 or 4 easy ways to do another 5,000,000,000 on top of that. So we think it's a very compelling story. And I'm a bit disappointed that the street doesn't think so this morning, but it's a very compelling story, and we're quite confident that we'll deliver these results. As we go through the next several years. So with that, why don't you, Scott and Todd, if you will come up, join me on the stage and we'll just get into Q and A. As always tell folks, there's no question you can't, not that I need to tell you the answer, but that we want to answer. Sorry. I missed something there. Okay. I think there are there mics for folks, sir, What's the other thing? Okay. So just raise your hand, if you will, on who's got the marks. PJ, why don't you start? If you're you're screaming out, we'll hear there's a mic coming to you. Sorry. Thank you. And a good job. So a question on asset yields. You mentioned that Chinese were losing money last year. This year, they're in double digits. You guys are going from 10% to 20% margins. At what point do the Chinese decide to add more capacity and could that sort of Well, if you I'll I'll start on this and maybe Todd, you wait in here in a second. We walk this business up when with, 70% capacity utilization, if you look at that. So the March from 10 or 12 to, you know, percent margins that we had to let's say 16 or so that 400 basis point step was really had nothing to do with capacity utilization. It was all just the model our ability to, to, to operate this club around the world. What we saw at that period of time, if you look at, you know, I'm talking about China now. China was probably at 50% capacity utilization in those days. And the move in China to shore up industry, part of that is to get that capacity utilization way up. So I think that's happening today. I think industry today over there is making it into the low double digits. And I'm talking about the big state owned kind of industry, which kind of sets pace, in this. So we don't see that situation in terms of what we're building. We don't think that's gonna we don't think that's gonna again, in the near time frame. I mean, maybe it would at some point, but it's hard for me to see what happened again. Yes, I mean, if part of the question or behind that is are people going to add again or bring new capacity back into the fold? I think we've got to think up the the landscape today and the ability to find a space in sanction industry park that's limited. Not much space left. It's got to be in a chemical park that's already been green lighted for these types of operations. Again, that's limited today versus 10 years ago. You have to get the permits, so that goes back to environmental reform, energy see. So, so question mark there, today versus going back. You know, 10 years ago, there's cheap coal. Really the case any longer. So that feedstock profile has also changed. Capital cost to build probably 40 plus percent higher today than 10 years ago in terms of, capital cost. I mean, lots of different things would have to be in place, you know, to the environment to expand more. The other one, of course, is technology, which technology would be practiced. Some of this was coal based send gas through methanol ultimately to Aceto gas different than our process, very, very capital intensive process. To do it that way. You're talking probably close to a $1,000,000,000 all in. So you'd have to have the funding for that. And then the technology, at least relative to acetic acid, is something we're very proud to have a major, position on in terms of our know how. We also work with the leading technology offer in China with respect to acetic acid technology SWRI, which we just extended our multi year agreement with. So we think we've got our hands around that type of technology on top. So lots of pieces would have to be in place to D and E were close to what was, what was continued. Just a broader question on that. The goal of Chinese government is not to just shut down capacity. Is to shut down oil capacity and add less polluting new capacity. And do you see You want go ahead. I'm sorry. So do you see that happening? I mean, maybe they could relocate those into other parks and No. I think that's totally different. This whole dialogue got started in my point of view around the Chinese government's concern, rightly so, in the 2012 kind of time frame, of every, every business they had there, industry operating at 50% capacity. And knowing full well that the loans and the, you know, the financial integrity of that system was at risk. It was solely and deliberately set in place to rationalize capacity. Now it's taken on a lot more of a life of the social justice portion of it, just having a healthy workplace and environment. But the root issue from the Chinese government is to get, get their industry up to a viable operating capacity with operating profit. Did they raise a price of coal? It is really, so the coal industry itself could survive and could be functioning and could put in the right pollution gear that they needed to operate. So they've artificially done that. So my belief is that that is the real PGA. That's the real driver here at the end of the day. And, and, and so I'm quite confident that's they'll work hard to maintain it. You also need to appreciate when the investments occurred in China was really a review that Chinese could compete externally with a product move it offshore. They cannot, in a real sense. It's very, very difficult for them to do so. So in that process, you gotta, you're then building satisfied local market if you build and the kind of investments that Todd's talking about, it makes it very unlikely that you see major investments in this particular vehicle and what I'll say the next 5 to 10 years. It just it's hard for me to see a scenario where that will happen. And there's gonna be enough acid out there to keep everybody K in this 85% to 90% kind of range. And and, I think we'll, I think it's where it'll run. Thank you, Dave Begleiter, Deutsche Bank. Mark, with respect to your Astell's business, in the past, you've discussed maybe doing a joint venture type transaction similar to tow, Is that still a possibility? Is it likely over the next 3 years of this plan or has it evolved going forward? Well, I think one of the things we learned dealing with, the European Commission is that, that, you know, the concept of material, volumetric overlap within the European region is a principal position that at least with us they wouldn't budge on. So it's hard to do a deal like a Blackstone kind of deal. If it's going to be direct competition in the European, I would say, are the U. S. Market between one of the two players there. So, that kind of deal, I think, is difficult. Now, I'll roll it the other way. There are a number of smaller players out there that that could open themselves up to a bench kind of deal. And we've had Dialog with those and have ongoing Dialog with those today. There's also molecules that are out there. They don't have access to the market. And there are a whole there's a whole family of deals and that was Todd's to be missed it. I think my own personal view, the most impressive chart that Todd showed you was the one that showed all its points of connection. That all relates to different companies and groups we're interfacing with, and who we have potential to work together in ways to service the market. So I think a combination of those things could end up setting this up or teeing this up as more of an independent entity. Kevin McCarthy, Vertical Research Partners. A 2 part question on on M and A. Mark, you have a number of existing joint ventures in Engineered Materials in Japan, Korea, Saudi and elsewhere. That's been the case for many years. Would you like to acquire a controlling interest and consolidate these JVs? And if so, do you see any chance of that happening in coming years? And then the second part would relate to acetyl I think Todd and his presentation made a reference to M and A possibilities there. And so my question is, as you consider the coming years, do you see any meaningful potential, for M and A outside of engineered materials and you know, might there be, opportunity to consolidate what has become a more fragmented industry over the past decade? Yes. So I start here, maybe, Scott, you got going to bid it Todd in a second. When you look at the joint ventures, they've been extremely good partners for us in many, many ways. Some of those ventures, we actually have control, market control over those ventures. At the same token, about the same token, I think as, as, Scott said, we don't feel that, that we get shareholders will get value for those in Iraq way. You know, it's valued as well anyway, we don't think that value is fully recognized. So we look for ways to enhance those through restructuring of those deals. I don't want to get into details about exactly how that would happen. We would certainly be willing to buy out partners as part of that. And and those kind of proposals have been given. There's been other proposals given to work together in a different fashion to maybe more solomon like and sort of divide it up. There's different ways to approach it. But I think you should know, but we really want to see happening as we want to see the industry continue to improve itself. And we want our shareholders to get a returner for that. And we're going to leave no stone unturned until we make that happen. That's how I'd say that. Andy, do you want to hop in on M And A with the chain business or Todd or somebody? Well, I'll just finish the comment on the joint ventures and engineered materials. I mean, there surely sits an upside there if we can pull it off, but I would say every day, we've made more progress in having a bigger role. I mean, we're participating in off takes to support some of our growing business. We paid in some of the leadership as well. You've seen us change our economic interest in 1, We participate in some of the marking through our broader channel and with our solution set as well, another, but those are all incremental steps today. So an upside exists to do, to, to do something. We said we that we see over 40 companies in the acetyl space across multiple products and geographies. We are ramping up that work. We've identified 200,000 tons of new capability volume that we could bring in through that connecting these molecules into the Celanese network. It's a enhanced way to grow, a fresh way to grow for us. It can lead to other things. It's a great way to build relationships might lead to alliances, forms of partnership, and helps start to identify potential M and A. Opportunities for us. Hi, good afternoon. So right now, you're at around 2 times net leverage and you mentioned that there's a 1,000,000,000 of capacity to maintain IG. What is the implied net leverage, there? What guidance have the agencies given you? Is that two and a half, three times? It's in that range. We haven't commented specifically on that, but, and a lot depends upon kind of where we go from a growth perspective. And as we grow earnings, that, capacity will increase. It it's important for us just to outline that there's room. And it allows us to make sure to to the Todd and Scotts about leaving those stem in turn, from a business perspective that that we have options. And is it safe to say if there's something truly special, transformational that the ratings, you'd be willing to jeopardize that to pursue the growth initiatives? Yes. We're all about shareholder value. So if it made sense to do that, we do Great. Thank you. Good afternoon. Gotcha. Punjabi at Baird. So maybe a question for Scott Sutton, during your Engineered Materials presentation, you kind of showed us a progression curve, initial phase, translation 1 through 3, up 3000 projects you have sort of targeted for this year? How would they drop into those various phases? And how should we think about that 5000? How would that sort of translate into that 5000 by 20. Just curious as to what kind of visibility you have on the 5000 projects? Thanks. Yes, sure. I mean, you know, we, we can, I would say on average, we'll be able to see 18 to 24 months out? But that's only for a portion of those projects. A good deal because the introduction cycles and the commercialization cycles are so much shorter, we go out and obtain a in the same calendar year that we actually close them. So getting to 5000, right, really is dependent on changing the model and evolving the model such that we have in place the ability to do all those things I talked about, starting with customer options mapping step within a shorter time frame. I mean, the time frames are not getting longer. They are all getting getting shorter. Right? So it's not about we're never going to have a pipeline that we can go out and say, well, you know, 3 years from now, we already have a window there. We won't have that, but we will have the position that enables us to do that. Yeah. We've got the mic. Yeah. Mike, it's Arun. This is not an RBC. Just two quick questions. So first off, on the financial side, If you're, you know, implied EPS is above $9 this year and your implied EPS is $11 in 20.20, I mean, that could imply a slightly lower than 10% growth rate. So maybe you can just explain your thinking there. And then secondly, You've explained a lot on the innovation model within EM and, you've talked a lot about it. I mean, what's the risk that some of your competitors can replicate some of that? In the past, you've talked about your hit rate. Is that also increasing we can just touch on that. Thanks. Well, I think we're seeing, we're off to a really strong start in the chain business, and we haven't, in some ways, these numbers don't necessarily fully reflect our thought process about how that rolls through and evolves. So by your math, that would be correct. We'd be a little bit more front end loaded with that process, but, that's a finer then we use on some of these things, if I can say that. We don't have any competitors. That's how I'd answer the other question. There are people that that that produce these same polymers and sell these polymers. And they're they're from time of time, we bump heads with those guys. But the reality is in terms of what we're doing and the way we're doing it, we don't really have competition. It's how I would say it. You must say it differently. Well, I would say there's not a ceiling on where we can go, certainly, right? If you thought about what, if there is such a thing as a market share in this business, right, it's sort of infinitesimal, right, it's tiny, maybe 1%, something like that. And there's hundreds of different players, maybe a 1000 out there. We don't think of ourselves every day competing with any, any one of them, just like Mark says. So, you know, the risk isn't from the outside. The only risk is making sure that we can scale the model. That's right. Way back here in the bleachers. John Roberts. John. You're not expanding methanol. So your thoughts maybe about better to be a buyer than a producer maybe over the next few years? And is it also perhaps a good time to think about locking in some ethylene, for a longer term period given kind of where we are in the ethylene cycle? Yeah, methanol, our our methanol project economics are still attractive. And there are people that approach us and our partners approach us from time now. We still talk about it, but We don't see it at this moment in time as being totally critical to expand that methanol mix. Is that fair? And the 140,000 tons of additional acetic acid that we just announced overnight, we've got that covered. So flashed up well on a on a balance side at this stage. Yeah. So we're we're pretty good there. Yeah, ethylene prices have wandered down a bit and there's starting to be some moves in how folks think about contracting ethylene. And so we'll take advantage of that to the extent we can this year and next couple of years. Whoever's got the mic, just lady else, I'll hand out the mic, and Back here. Jeff Zekauskas at JP Morgan. On one of your slides, you talked about a longer term acetic acid expansion of 600,000 tons. I assume that's in North America and I assume that if you did that, you would back integrate into Methode are those reasonable assumptions or those are not? Not that you have to build your own plan yourself, but you might own a piece of somebody else's plan? Well, I think we like the integrated concept, and so that's not an unreasonable assumption if it worked out. We, you know, at least today, we don't have an interest of being solely just investing in methanol solely. Of course. But that linkage of methanol to the chain business is truly pretty attractive in that. And we kind of think when we look at that, there's actually a lot more value in that methanol route than is perhaps being capitalized on so far. Methanol Industries is about 1 half fuel and MTO, maybe it's 45% now. And, the acetic acid piece, I'm not sure what we're down to. 15% or 16% probably of the methanol market. Something like that? Yes, but that connectivity is kind of interesting to us around that piece of it. So I think you're comments make sense. The reason we put the 600 up there, that's called optionality, production options. So if we look at our portfolio to get into this decade or start of the next decade, you know, we need to decide what we're going to make everything that we're making. And so there could be a chance for us to rationalize something and reinvest somewhere else or something like that. So that's why we tagged that as 6600. But you're right, Jeff. We didn't put a location on any of that at this point. No location was said. So, too early to talk about where that will, that would take place and if we would do it. So it's related. So if you didn't build it in North America, where would you build it? We didn't talk about questions. Okay. Thank you. Yes. Hi, Frank Mitsch Wells Fargo. Jeff, I asked that question of gentleman, who was, doing the poster session on it. I couldn't get him to confirm Asia either. And and to that point, does it matter to you guys? Do you really care? You know, if we end up doing that, it would only happen because the market was there for it. We weren't being disruptive to the market. And we were creating the economics that are consistent with this up here. And so if I could do those things, do you really I'm not I'm not being flippant, but do you is it I wanna make sure I asked it the right way. Is it really you really care? My point of view is, simply, talking about Asia, given the, given the that there is an expectation of, Chinese facilities being shut down and you guys can operate in a more environmentally friendly way and debottleneck, etcetera and maybe do a greenfield there. And just sticking with the S Teals theme, Todd, you put up a nice chart showing how margins have trended since 2012 and kind of depressed and then moving up and so forth. And in 'seventeen, reaching a nice high level, as a base going even further. So my question is over the next couple of years, what do you see as the risks to that occurring and perhaps the opportunities, on the upside of that forecast? Yes. I mean, we're largely trading on fundamentals. We talked about, 83% utilization rates today starting to track towards the upper 80s by 2020. So that's kind of the fundamental trading environment that we're working in. We've got, about $100,000,000 associated with price out through 2020. So that's, that was in the 3, kind of, 3 buckets that rolled up to the $900 plus 1,000,000 by 2020. So key piece of that is is price margin related. So that's in there that also keeps us with a 20% EBIT range in terms of outlook. So we've got price in, good start to the year already. Yeah. So that's an average. So, you know, you should have a view that we're saying that the on 1 quarter, we're not down to 17% sometime. We could be. What we're kind of saying is we're indifferent to that. Does that make sense? If I'm bringing in more molecules and I got more control, I can still maintain the profitability. And so as we look at this normalization of sort of margins, we believe that that is a range that has a lot of economic sense associated with it. If you guys wanted to sit down with us for a mayor, if you would explain that to you. When you look every derivative, every market, every place it is. It's a good average netback position, and it seems like that's where we should be. And that it is also historically If you roll up historical pricing before we got into the sort of China syndrome, that's where it was. So it's just a very, it's a normal place for this business to hunt. I think in terms of what we reflected 20%. The industry margin would not be that high at that same point because these are individual players spread all over, you know, all over the world, very, very different situations for them. So they normalize at some level much lower than that probably 400 or 500 basis points. Very helpful. And then just just simplistically over the next 3 years, you have an 11% sales CAGR. How should we think about that breaking down price volume, M and A, FX? I don't have that data. Do you have that? Well, I mean, you know, I can, I can just add? I mean, there, we're not planning on an FX gain or loss, right? So I mean, it comes down to volume and price. You see the engineered materials business driving volume still in a big way. You've heard Todd talk about, you know, continuing to, to pick up volume through alliances and other reasons as well. So there'll be some price, but it'll be mostly volume driven. Whoever has a mic John McNulty of BMO Capital Markets. Two questions. Mark, on the sales side, you're looking for 11% growth EBIT long term forecast is 10%. I guess it's a little less leverage than I guess I would expect. So I guess what are the puts takes that maybe hold back that, that EBIT growth versus the sales growth, how should we be thinking about that? Yeah. It's really more mix related to it. So if you really look at where the margins are being generated, it's it's more of a mix thing. I wouldn't read too much into Okay, fair enough. And then the question, for Todd on the, on the acetic acid side, the last time we saw utilization rates kind of at the level that you're thinking they're going to get to by 2020, give or take, we saw asset prices bouncing around $900,000 a ton. I guess, are there any structural reasons why we wouldn't necessarily see that happen again? And I guess, how should we be thinking about that going forward? I understand the question. I think, I mean, there's probably a lot of logic in that. We were touching mid-nine 100 back in the pre China buildup range, we're mid 700s today. Lot to work on to make that happen. Is something we'll, you know, we'll pursue in our network with our customer base. So that's certainly something we'll work hard on. I think the important thing is that you are selling this stuff by the time, and so $7.50 a ton is to deliver a cheap price. And, and if you look at it in terms of its implied use, and our theoretical substitutions, it still fits in very well. So I I think the pricing is resetting at a level that is going to make sense. And it's going to be driven off the biggest consuming part of the world, which is China, which is, as its reference point. So, we're pretty comfortable that we'll settle in that range. 600 to a little north of that. Thanks very much. Yeah. Mike Sison KeyBanc. Mark, you know, when you when you come back in 2020 and host the Investor Day in Cleveland likely, right, We've been looking at Cleveland. We've been looking at Cleveland. And you hit your 2 goals in terms of the 900 for the acetyl Chain and AEM. And your multiple isn't where you want it to be. What's sort of the decision making process in your head to maybe separate the business to ensure that you get the value that you, you want. Well, I put the slide up to show, you know, I don't know how best disappointment. I think the, you know, the model we put out and the growth we follow the plan is very methodical. And we're not, there's not a lot of pomp and circumstance in what we do. We just work hard every day. Really would have expected there to be more evaluation go to our shareholders. So it's a disappointment to us that that's not yet happened. We are working hard to see that that does happen. We think that there is roughly $5,000,000,000 to $7,000,000,000 of embedded value in our company that's not recognized by shareholders. There's different ways you can do that math, but it's a fair amount. And we show that range up there. We talk about optionality. We are looking at ways we can unlock that value for our shareholders, and that could well result in us having more than 1 corporate entity as Celanese. That's okay for us. We're not married to a structure. We're not married to a specific portfolio, we're just committed to and married to driving shareholder value. So I don't think that will be the case. Not that we won't be in Cleveland. But I I don't think that that that, I just found it hard to believe. If you look at that point in time, it's 8 years of this and 8 years of us looking for ways, and we'll find ways to keep unlocking bay that there's not that recognized by shareholders. Great. And as a quick follow-up, when you think about Engineered Materials, the The process seems very unique. I don't see a lot of plastics businesses growing anywhere close to where yours is at. You've got, a robust new project pipeline And in the event you get capital from other areas, is there other chemical you know, businesses that you can replicate that, you know, maybe chemicals for consumer that on an acquisition basis, big base that would be that could be unique for you to buy and restart this engine in another area? Well, we've played with that, but I didn't know how you guys would react to I, I think the, a model that says that we care about, about really driving the rate of change embedded with any kind of product line is a pretty intriguing model. It works well for materials because everybody's focused on the material evaluation. You just have to make sure that it was a model that was demanding that kind of rate of change. We tried it in a former life in fine chemicals, and it really was there I think at the time we couldn't put together the right asset mix to make that work. So yeah, we would consider that, but I we're pretty happy focusing on materials and as Scott said, we have really, really small market penetration in terms of what's theoretically there, and that's almost infinitely large for us. In the chain business, we're focusing on making sure that all our shareholders recognize the value that's really built up in that. Thank you, Vincent Andrews from Morgan Stanley. I have a quick clarifying question, and I have two questions. Mark, I believe when you had your value slide up there, you said that the $11 did not include share repurchases. Is that correct? I'll do the math while I was just done in there. Okay. Thank you. So that was 1. And then secondly, in the innovation sessions, there was some discussion, at least in my group about how your products, one of the capabilities is placing paint in traditional paints and coatings. So can you talk about how large of an opportunity that is going forward in sort of where you are, what inning any guidance? Yes. I mean, sure. I mean, Vincent, I mean, it's, of course, one of many opportunities. It's one that we have some very interesting technology to be able to do that. But remember the value of this. I mean, the value is that you're replacing a lot chaos that's happening within our customers because they're getting someone to make a part. They're having to ship it somewhere else to get them to paint it all kind of issues with that and, and ship it back. So I don't, you know, I don't classify that opportunity as for example, bigger than our opportunity in the medical and pharma space. But it is one of those where what we're doing is going out and taking care of the customer's complexity. We're pulling it to our side of the table where it tends to disappear, right? So that, that situation replicates it, you know, 30 or 40 times over. We just pick paint for that example. And then I just have a follow-up on, on acetate tow. And I apologize if I missed this during the presentation, but I didn't see, you have utilization about 80% now and that's where the bar ends. So how do you see? How do you see utilization going forward and maybe some comments on the recent declines in cigarette consumption that have been reported in the first quarter? Yes. I mean, I would say as far as capacity utilization going forward, I mean, one of the things that we did put forth is, we'll be closing an asset. Right, and we'll be looking for ways to accelerate doing more of the same. So I would expect that, that you to certainly, our utilization is is going to likely improve over that period. You net that into industry utilization, perhaps it stays in that range for a couple more years out. You know, your second question, I mean, I realize that in at least 1, you know, in 1 quarter, there was some decline in cigarette sales, right? I think we step back and take a look at that. I'm not going to worry too much over 1 quarter because you've seen that happen before. You've seen sales go up and down depending on what promotions are running, things that are going on in the cigarette industry. So I'm not too worried about it. From our part you know, we see that there's still that sort of slow decline going on, not a change. Hi, Bob Koort from Goldman Sachs. Scott, Sutton, you gave a slide in your presentation that talked about the substantial increase in projects, but not a substantial increase in personnel. Give me a little more flavor on how that can happen. I would assume a lot of this customer engagement in your model requires face time and headcount. So how are you able to get that much more efficient with your Right. Well, our, look, our, the number one thing we do is work on that model every day. And as we work on that model, it gets more effect right? So let me just give you, give you a simple example, Batna. You know, like I explained the customer options mapping process. Right? And if you think about what's going on there, behind a significant size customer, you know, there's hundreds of opportunities. Behind us, hopefully I made the, made the proof that our solution set is thousands. So how can you get one person to discover, instead of 2 opportunities at a customer visit, discover 30. How do you get him at the same time to match that up against thousands of possibilities and basically conclude a project right there. We get more efficient at the process. Right? Because that is our IP. We're working on our IP as opposed to just throwing resources at it. When we end up throwing too much resource at it, you bring, you know, too much chaos into the system. So you fix the process first, then you grow with some limited resources and add them. It's a key point because you could bog down the system. You know, I mean, we it was when we started this and and really 13, it was really bogged down with 300 to see output. So that model and how you work that model is going to be a really important part of it. And the informative nature of how we conduct ourselves from this spot. We see that as really fertile territory for us to get a lot smarter and a lot better. With us. And Mark, you alluded to, you would consider whatever, whatever, business strategy or segmenting makes sense for shareholder value. Is there any issue about lack of scale, if you were to think about separating businesses that something with $900,000,000 of EBITDA would suffer a penalty from a valuation standpoint? Or do you think both businesses, both cores are big enough that as stand alone entities Wynthia? You know, we look at, we, I think you guys asked us to, we did look at it several years ago at the, at the, you know, sort of the hurdle rate, what you'd have to achieve to have a a blow up, if you will, if I use that term, end up with the same total shareholder value. And we have some pretty big hurdles there to do that. We have taken steps to pull those hurdles back, really dealing with tax rate and some of the, penalty associated with, our debt structure, we've even pulled back the, pain associated with fixed cost. By thinking about being more mature about how we handle the operation of our businesses. Having said that, there still is a negative to that. That you would have to overcome, when you, if you did that sort of thing. So we look at that from a point of view of not so much whether there's scale, but can you actually, can you really get 2 Bible businesses, the sum of which on that instantaneous day is no worse than the collective sum of the equity value of the corporation. Shareholder value is really then created, you know, based on what that, what happens after that. So if we ever get to that scenario, I think it's going to be part of a transformational kind of deal that tees up, 2 different paths that, that are immediately seen by you in rate is being more favorable than the existing combined path. So, I guess two questions, Mark. So in the Engine Materials presentations, you guys had a couple of slides that talked about tightness towards the end of the decade. You know, Palm going above 100% utilization rates was one of them, but also just more broadly. In that environment, would you expect margins to be, would you be able to piggyback that environment or would you expect margins to decline? And secondly, rather swagishly, could you address how you think the portfolio acts differently in a recession now compared to, say, 5, 7 years ago. You want to do the first one? Yeah. I'll take the first part of that. And, and that's right. I mean, in Palm, for example, you see, you know, industry utilization tightening up. That's also the case in some of the other polymers, certainly not everyone that we have. I do expect to see some margin improvement because of that. You may have noticed that we're raising price in this business, and it's not a business that we've traditionally raised price in, but we're bringing a lot of value. Investment cost is quite high. Is there at a reasonable level, so I expect to see some expansion. That's Waggishly. I'm not sure if we can handle that, but, you know, if you look at it from a recession point of view, if you look back at 2008, 2009 was certainly as tough a time as any that you would see. You did see movement in in, demand for a short period of time. And so demand kind of really collapsed down and came back up. You saw movement in pricing in, the chain business. At that period of time. But keep in mind, as you are operating at that period of time, you're already starting to come off that curve. So you're probably already down at 80% capacity even in 20,021,008. So I, I think our view is, or my view is, anyway, is that I don't think that the EM business will be materially impacted by a recession. In fact, if it was a slowdown, more of a classic just lethargic business operation, that's what's driving all the change that you saw next door. So in many ways, it just reinforces the need for somebody to do something differently. And so I think as long as we can find ways to continue to grow in that regard, I think we're probably okay for that business. In Todd's business, I, I kind of don't see that same pricing dynamic right now. We would not sell asset for you know, $400 a ton. And we have a machine where I don't need to, if that makes sense. You know, it's a machine and we're gonna fix costs up to very, very low. So my guess gut is it's not quite as volatile a situation in that arena as we would have seen before. Yeah. I also think if you look at the global nature of our corporation now, we have a lot more balance regionally than what we did before. We were you know, more overweight in the Western Hemisphere back in 2008. Now Engineered Materials has substantial part of its business now in Asia. So we have a little more global and what we had historically. Other questions. Alex, you frame of Nomura Instinet. Coming back to Engineered Materials, Mark, your comment that you have no competitors there Could you first maybe expand on that? And in particular, I wanted to know, when your initial sale when you, let's say, product development concludes and you sign a contract, if there's some period of time, presumably that contract ends, what happens competitively after that? Well, the comment on no competitors is, you know, the combination of what we're doing in terms of going in with a single point of focus, and being, product agnostic on that transaction that's occurring. That's what we have no competitors with. So we may be competing with somebody who will sell a nylon you know, that moment in time, and we're selling nylon plus this, plus that, plus that, plus that, plus that. So the deals we like are the deals where they're looking for solution and a solution set and portfolio we bring is not matched by anyone. That's what I mean by no competitors. So, so Yeah. And if you're just buying nylon or palm and you don't care about anything other than making a zipper for your trousers, there's a lot of folks could satisfy that transaction. Not just us. We try to minimize that portion of our business, in there. And with the success that Scott and team or have any we're seeing that happen just minimize over time. I'm not quite sure. Can you ask your second question in a slightly different way to make sure? Part is just life cycle of this innovation, right? Let's say you, you have, you develop a new compound, right, and you sell it, and it's unique in at that first time of sale, but then after some time, let's say the first contract is up and is there a rebid process when others can come in and that free bid is more competitive. Yes, yes. And I'll let you give more contemporary guys, but there's always leakage. We do something. We make a product. We sell it. At the same time, there's another product that's dropped out of the portfolio. You know, they made a substitution equipment, and that model, they've done something different. So part of this process is that we have enough embedded growth in there, which needs to be probably in the teens for us to end up sub 10, where we are. Is that fair, Scott? I mean, I think that's right. I mean, there's a constant attrition in that business, right? But I would also say that a lot of a lot of times when you have an order or a contract expire or a certain life cycle, really it's just another opportunity. In fact, it's really an opportunity to go in and get more projects, right? Having the need to have those extra interactions to prove the solution that's been delivered, the enhancements we have, and the ability to match that setup. Every time we go through that cycle, we normally pull a lot more projects into our system. So you get the attrition, but you get a lot more projects too. Anyone else? Okay. And I'll serve you in the back. So do we have lunch outside? Is that right? Or okay. Well, listen. Thank you very much for being here. Really appreciate it, us been this morning with you and all you do for us. Thank you.

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