Celanese Corp (CE) FY 2022 MD&A

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

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

The following discussion should be read in conjunction with the accompanying consolidated financial statements and notes to the consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

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

Forward-Looking Statements

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

Risk Factors

Item 1A. Risk Factors of this Annual Report also contains a description of certain risk factors that you should consider which could significantly affect our financial results. In addition, the following factors, among others, could cause our actual results to differ materially from those results, performance or achievements that may be expressed or implied by such forward-looking statements:

•changes in general economic, business, political and regulatory conditions in the countries or regions in which we operate;

•volatility or changes in the price and availability of raw materials and energy, particularly changes in the demand for, supply of, and market prices of ethylene, methanol, natural gas, wood pulp and fuel oil and the prices for electricity and other energy sources;

•the length and depth of product and industry business cycles particularly in the automotive, electrical, textiles, electronics and construction industries;

•the ability to pass increases in raw material prices, logistics costs and other costs on to customers or otherwise improve margins through price increases;

•the accuracy or inaccuracy of our beliefs or assumptions regarding anticipated benefits of the acquisition (the "M&M Acquisition") by us of the majority of the Mobility & Materials business (the "M&M Business") of DuPont de Nemours, Inc. ("DuPont"), including as a result of the performance of the M&M Business between signing and closing of the M&M Acquisition;

•the possibility that we will not be able to realize anticipated improvements in the M&M Business's financial performance – including optimizing pricing, currency mix and inventory – or realize the anticipated benefits of the M&M Acquisition, including synergies and growth opportunities, within the anticipated timeframe or at all, whether as a result of difficulties

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

•increased commercial, legal or regulatory complexity of entering into, or expanding our exposure to, certain end markets and geographies;

•risks in the global economy and equity and credit markets and their potential impact on our ability to pay down debt in the future and/or refinance at suitable rates, in a timely manner, or at all;

•diversion of management's attention from ongoing business operations and opportunities and other disruption caused by the M&M Acquisition and the integration processes and their impact on our existing business and relationships;

•risks and costs associated with increased leverage from the M&M Acquisition, including increased interest expense and potential reduction of business and strategic flexibility;

•the ability to maintain plant utilization rates and to implement planned capacity additions, expansions and maintenance;

•the ability to reduce or maintain current levels of production costs and to improve productivity by implementing technological improvements to existing plants;

•increased price competition and the introduction of competing products by other companies;

•the ability to identify desirable potential acquisition or divestiture opportunities and to complete such transactions, including obtaining regulatory approvals, consistent with our strategy;

•market acceptance of our products and technology;

•compliance and other costs and potential disruption or interruption of production or operations due to accidents, interruptions in sources of raw materials, transportation, logistics or supply chain disruptions, cybersecurity incidents, terrorism or political unrest, public health crises (including, but not limited to, the COVID-19 pandemic), or other unforeseen events or delays in construction or operation of facilities, including as a result of geopolitical conditions, the occurrence of acts of war (such as the Russia-Ukraine conflict) or terrorist incidents or as a result of weather, natural disasters, or other crises;

•the ability to obtain governmental approvals and to construct facilities on terms and schedules acceptable to us;

•changes in applicable tariffs, duties and trade agreements, tax rates or legislation throughout the world including, but not limited to, adjustments, changes in estimates or interpretations or the resolution of tax examinations or audits that may impact recorded or future tax impacts and potential regulatory and legislative tax developments in the United States and other jurisdictions;

•changes in the degree of intellectual property and other legal protection afforded to our products or technologies, or the theft of such intellectual property;

•potential liability for remedial actions and increased costs under existing or future environmental, health and safety regulations, including those relating to climate change or other sustainability matters;

•potential liability resulting from pending or future claims or litigation, including investigations or enforcement actions, or from changes in the laws, regulations or policies of governments or other governmental activities, in the countries in which we operate;

•changes in currency exchange rates and interest rates; and

•various other factors, both referenced and not referenced in this Annual Report.

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

Results of Operations

Financial Highlights

_____________________________

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

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Factors Affecting Business Segment Net Sales

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

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Consolidated Results

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net sales increased $1.1 billion, or 13%, for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher pricing in both of our segments, primarily driven by our Engineered Materials segment, due to higher raw material costs, higher energy costs and product mix; and

•higher volume in our Engineered Materials segment, primarily in elastomers related to our acquisition of the majority of the Mobility & Materials business (the "M&M Business"), our acquisition of the Santoprene™ thermoplastic vulcanizates elastomers business of Exxon Mobil Corporation ("Santoprene"), as well as the Korea Engineering Plastics Co., Ltd., ("KEPCO") restructuring;

partially offset by:

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

•lower volume in our Acetyl Chain segment, primarily due to decreased demand in Asia.

Selling, general and administrative expenses increased $191 million, or 30%, for the year ended December 31, 2022 compared to the same period in 2021, primarily due to:

•higher functional and project spending of $187 million in Other Activities, primarily related to our acquisitions of the M&M Business and Santoprene.

Operating profit decreased $568 million, or 29%, for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher raw material and energy costs in both of our segments;

•higher spending in both of our segments, primarily as a result of our acquisitions of the M&M Business and Santoprene, as well as increased plant operating and maintenance expenses; and

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•lower Net sales in our Acetyl Chain segment;

partially offset by:

•higher Net sales in our Engineered Materials segment.

Non-operating pension and other postretirement employee benefit income decreased $89 million for the year ended December 31, 2022 compared to the same period in 2021 primarily due to an increase in recognized actuarial loss of $40 million as a result of lower than expected actual asset returns, partially offset by an increase in the weighted average discount rate used to determine benefit obligations from 2.5% to 4.9% and a decrease in expected asset returns of $39 million. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information.

Our effective income tax rate for the year ended December 31, 2022 was (34)% compared to 15% for the year ended 2021. The lower effective income tax rate for the year ended December 31, 2022 compared to the same period in 2021 was primarily due to the reorganization of our foreign legal entity holding structure and relocation of certain of our intangible assets to align with the acquired M&M Business foreign operations. See Note 15 - Income Taxes in the accompanying consolidated financial statements for further information.

Discussion of our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 and for the year ended December 31, 2020 compared to the year ended December 31, 2019, can be found in Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Reports for the years ended December 31, 2021 and December 31, 2020, respectively.

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Business Segments

Engineered Materials

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net sales increased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher volume, primarily in elastomers related to our acquisition of the M&M Business, our acquisition of Santoprene, as well as the KEPCO restructuring. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information; and

•higher pricing for most of our products, primarily due to higher raw material costs, higher energy costs and product mix;

partially offset by:

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

Operating profit increased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher Net sales;

largely offset by:

•higher raw material costs for all of our products and increased sourcing costs as a result of higher logistical costs and global shipping constraints and our acquisition of the M&M Business;

•higher spending of $258 million, primarily as a result of our acquisitions of the M&M Business and Santoprene, as well as plant operating and administrative expenses; and

•higher energy costs of $124 million, primarily for steam.

Equity in net earnings (loss) of affiliates increased for the for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•an increase in equity investment in earnings of $90 million from our Ibn Sina strategic affiliate, primarily as a result of tighter market conditions and stronger demand.

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Acetyl Chain

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net sales decreased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•lower volume for most of our products due to decreased demand, primarily in Asia; and

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

partially offset by:

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

•higher volume for VAM due to increased demand.

Operating profit decreased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher raw material and sourcing costs, primarily for methanol and carbon monoxide due to stronger demand and tighter market conditions, as well as higher distribution costs due to global shipping constraints;

•lower Net sales;

•higher energy costs of $89 million, primarily due to price increases for natural gas and electricity; and

•higher spending of $53 million, primarily as a result of increased plant operating and maintenance expenses.

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Other Activities

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Operating loss increased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•higher functional and project spending of $187 million, primarily related to our acquisitions of the M&M Business and Santoprene;

partially offset by:

•lower incentive compensation cost.

Non-operating pension and other postretirement employee benefit income decreased for the year ended December 31, 2022 compared to the same period in 2021 primarily due to:

•an increase in recognized actuarial loss of $40 million as a result of lower than expected actual asset returns, partially offset by an increase in the weighted average discount rate used to determine benefit obligations from 2.5% to 4.9%, and a decrease in expected asset returns of $39 million. See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information.

Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents, dividends from our portfolio of strategic investments and available borrowings under our senior unsecured revolving credit facility. As of December 31, 2022, we have $1.45 billion available for borrowing under our senior unsecured revolving credit facility, if required, in meeting our working capital needs and other contractual obligations. In addition, we held cash and cash equivalents of $1.5 billion as of December 31, 2022. We are actively managing our business to maintain cash flow, and we believe that liquidity from the above-referenced sources will be sufficient to meet our operational and capital investment needs and financial obligations for the foreseeable future.

On November 1, 2022, we acquired a majority of the M&M Business for a purchase price of $11.0 billion, subject to transaction adjustments, in an all-cash transaction. For further information regarding the acquisition and related financing transactions, see Debt and Other Obligations in this Liquidity and Capital Resources and Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information.

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

Capital expenditures were $543 million for the year ended December 31, 2022. We continue to prioritize those projects expected to drive productivity in the near-term and expect capital expenditures to be approximately $600 million in 2023, primarily due to certain investments in growth opportunities and productivity improvements. In Engineered Materials, our expansion of (1) the compounding capacity and (2) the new liquid crystal polymer ("LCP") unit at our facilities in Nanjing, China are, after experiencing some delays due to certain permitting issues, in detailed engineering design and our (3) energy optimization productivity project at our polyoxymethylene ("POM") unit in Frankfurt, Germany is in front end engineering design. In the Acetyl Chain, our planned expansion of (1) the capacity of our vinyl acetate ethylene ("VAE") emulsions units in Nanjing, China, (2) the capacity of our vinyl acetate monomer ("VAM") plant in Bay City, Texas, (3) the sustainable

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production of methanol at our Fairway joint venture methanol unit in Clear Lake, Texas using captured carbon dioxide as feedstock, (4) our acetic acid complex expansion in Clear Lake, Texas and (5) our VAE emulsion plant expansion in Frankfurt, Germany, are in various stages of construction and on schedule. We continue to see the incremental capacity from investments made in recent years strengthen our manufacturing network reliability to best serve our customers.

We did not repurchase any Common Stock during the year ended December 31, 2022.

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

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

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

Cash Flows

Cash and cash equivalents increased $972 million to $1.5 billion as of December 31, 2022 compared to December 31, 2021. As of December 31, 2022, $1.3 billion of the $1.5 billion of cash and cash equivalents was held by our foreign subsidiaries. Under the TCJA, we have incurred a prior year charge associated with the deemed repatriation of previously unremitted foreign earnings, including foreign held cash. These funds are largely accessible without additional material tax consequences, if needed in the U.S., to fund operations. See Note 15 - Income Taxes in the accompanying consolidated financial statements for further information.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

•Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities increased $62 million to $1.8 billion for the year ended December 31, 2022 compared to $1.8 billion for the same period in 2021, primarily due to:

•favorable changes in trade working capital of $291 million, primarily due to the timing of collections of trade receivables, inventory builds and settlement of trade payables;

partially offset by:

•a lower earnings performance.

•Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities increased $10.0 billion to $11.1 billion for the year ended December 31, 2022 compared to $1.1 billion for the same period in 2021, primarily due to:

•a net cash outflow of $9.4 billion related to the M&M Acquisition in November 2022, partially offset by the acquisition of the Santoprene™ thermoplastic vulcanizates elastomers business of Exxon Mobil Corporation in 2021,which did not recur in the current year. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information; and

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•proceeds from the sale of marketable securities of $516 million, which did not recur in the current year.

•Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities increased $11.3 billion to $10.3 billion for the year ended December 31, 2022 compared to net cash used in financing activities of $1.0 billion for the same period in 2021, primarily due to:

•an increase in net proceeds of long-term debt of $10.0 billion, primarily due to the issuance of senior unsecured notes consisting of $2.0 billion in principal amount of 5.900% notes due July 5, 2024, $1.75 billion in principal amount of 6.050% notes due March 15, 2025, $2.0 billion in principal amount of 6.165% notes due July 15, 2027, $750 million in principal amount of 6.330% notes due July 15, 2029 and $1.0 billion in principal amount of 6.379% notes due July 15, 2032 (collectively, the "Acquisition USD Notes"), as well as senior unsecured notes consisting of €1.0 billion in principal amount of 4.777% notes due July 19, 2026 and €500 million in principal amount of 5.337% notes due January 19, 2029 (collectively, the "Acquisition Euro Notes" and, together with the Acquisition USD Notes, the "Acquisition Notes"), partially offset by the maturity of the 5.875% senior unsecured notes ("5.875% Notes") which were repaid during the year ended December 31, 2021;

•a decrease in share repurchases of our Common Stock of $983 million during the year ended December 31, 2022; and

•an increase in net borrowings on short-term debt of $336 million, primarily due to borrowing under the senior unsecured revolving credit facility related to the M&M Acquisition in November 2022.

In addition, exchange rates had a favorable impact of $4 million on cash and cash equivalents and an unfavorable impact of $15 million on cash and cash equivalents for the years ended December 31, 2022 and 2021, respectively.

Debt and Other Obligations

•Senior Credit Facilities

In connection with the M&M Acquisition, on February 17, 2022, we entered into a bridge facility commitment letter with Bank of America, N.A. ("Bank of America") pursuant to which Bank of America committed to provide, subject to the terms and conditions set forth therein, a 364-day $11.0 billion senior unsecured bridge term loan facility (the "Bridge Facility"). Subsequently, commitments in respect of the Bridge Facility were syndicated to additional financial institutions as contemplated thereby.

On March 18, 2022, we entered into a term loan credit agreement (the "March 2022 Term Loan Credit Agreement"), pursuant to which lenders have provided a tranche of delayed-draw term loans due 364 days from issuance in an amount equal to $500 million and a tranche of delayed-draw term loans due 5 years from issuance in an amount equal to $1.0 billion. On September 16, 2022, Celanese, Celanese U.S. and certain subsidiaries entered into an additional term loan credit agreement (the "September 2022 Term Loan Credit Agreement" and, together with the March 2022 Term Loan Credit Agreement, the "Term Loan Credit Agreements"), pursuant to which lenders have provided delayed-draw term loans due 3 years from issuance in an amount equal to $750 million (the term loans represented by the Term Loan Credit Agreements collectively, the "Term Loan Facility"). The Term Loan Facility was fully drawn during the three months ended December 31, 2022. The Term Loan Facility is guaranteed by Celanese and domestic subsidiaries representing substantially all of our U.S. assets and business operations.

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

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•Senior Notes

We have outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933 ("Securities Act"), as amended, as follows (collectively, the "Senior Notes"):

The Senior Notes were issued by Celanese U.S. and are guaranteed on a senior unsecured basis by Celanese and the Subsidiary Guarantors. Celanese U.S. may redeem some or all of each of the Senior Notes, prior to their respective maturity dates, at a redemption price of 100% of the principal amount, plus a "make-whole" premium as specified in the applicable indenture, plus accrued and unpaid interest, if any, to the redemption date.

On July 14, 2022 and July 19, 2022, Celanese U.S. completed the offerings of the Acquisition USD Notes and Acquisition Euro Notes, respectively. Fees and expenses of the offering of the Acquisition Notes, inclusive of underwriting discounts, were $65 million. Net proceeds from the sale of the Acquisition Notes were used to fund the purchase price for the M&M Acquisition, with any remaining proceeds being used for general corporate purposes.

The entry into the Term Loan Credit Agreements and the offerings of the Acquisition Notes reduced availability under the Bridge Facility to zero, and we terminated the Bridge Facility. During the year ended December 31, 2022, we paid $66 million in fees related to the Bridge Facility commitment, amortizing these fees to interest expense.

•Accounts Receivable Securitization Facility

In 2021, we entered into an amendment to the amended and restated receivables purchase agreement under our U.S. accounts receivable purchasing facility among certain of our subsidiaries, our wholly-owned, "bankruptcy remote" special purpose subsidiary ("SPE") and certain global financial institutions ("Purchasers"). We de-recognized $1.1 billion and $1.1 billion of accounts receivable under this agreement for the years ended December 31, 2022 and 2021, respectively, and collected $1.1 billion and $1.1 billion of accounts receivable sold under this agreement during the same periods. Unsold U.S. accounts receivable of $99 million were pledged by the SPE as collateral to the Purchasers as of December 31, 2022.

•Factoring and Discounting Agreements

We have factoring agreements in Europe and Singapore with financial institutions. We de-recognized $320 million and $230 million of accounts receivable under these factoring agreements for the years ended December 31, 2022 and 2021, respectively, and collected $325 million and $185 million of accounts receivable sold under these factoring agreements during the same periods.

In 2021, we entered into a letter of credit discounting agreement in Singapore with a financial institution. We de-recognized $50 million and $70 million of accounts receivable under this agreement for the years ended December 31, 2022 and 2021, respectively.

Our material financing arrangements contain customary covenants, including the maintenance of certain financial ratios, events of default and change of control provisions. Failure to comply with these covenants, or the occurrence of any other event of

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default, could result in acceleration of the borrowings and other financial obligations. We are in compliance with all of the covenants related to our debt agreements as of December 31, 2022. On February 21, 2023, we amended the Credit Agreements for certain covenants included in the respective credit agreements.

See Note 11 - Debt in the accompanying consolidated financial statements for further information.

Guarantor Financial Information

We have outstanding senior unsecured notes, issued in public offerings registered under the Securities Act of 1933, as amended (collectively, the "Senior Notes"). The Senior Notes were issued by Celanese U.S. ("Issuer") and are guaranteed by Celanese Corporation ("Parent Guarantor") and the Subsidiary Guarantors (collectively the "Obligor Group"). See Note 11 - Debt in the accompanying consolidated financial statements for further information. The Issuer and Subsidiary Guarantors are 100% owned subsidiaries of the Parent Guarantor. The Subsidiary Guarantors are listed in Exhibit 22.1 to this Annual Report.

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

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

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

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

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Share Capital

On February 8, 2023, we declared a quarterly cash dividend of $0.70 per share on our Common Stock amounting to approximately $76 million. The cash dividend will be paid on March 7, 2023 to holders of record as of February 21, 2023.

Our Board of Directors has authorized the aggregate repurchase of $6.9 billion of our Common Stock since February 2008. These authorizations give management discretion in determining the timing and conditions under which shares may be repurchased. This repurchase program does not have an expiration date. During the year ended December 31, 2022, we did not repurchase any shares of our Common Stock. As of December 31, 2022, we had $1.1 billion remaining under authorizations by our Board of Directors.

See Note 14 - Shareholders' Equity in the accompanying consolidated financial statements for further information.

Contractual Obligations, Guarantees and Commitments

We calculated $2.7 billion of all future interest payments on debt and other obligations using the rate in effect on December 31, 2022 and $476 million of all future pension and other postretirement funding obligations. We have directly guaranteed various debt obligations under agreements with third parties related to certain equity affiliates. As of December 31, 2022, we have directly guaranteed $142 million and €27 million of such obligations.

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

In the accompanying consolidated financial statements, see Note 10 - Current Other Liabilities for current asset retirement obligations, Note 11 - Debt for a description of the guarantees under our Senior Notes and Credit Agreement, Note 12 - Benefit Obligations for a description of the pension and other postretirement funding obligations, Note 13 - Environmental for a description of environmental obligations, Note 15 - Income Taxes for a description of uncertain tax positions, Note 16 - Leases for lease obligations and Note 19 - Commitments and Contingencies for a discussion of commitments and contingencies related to legal and regulatory proceedings.

Market Risks

See Item 7A. Quantitative and Qualitative Disclosure about Market Risk for further information.

Business Environment

We experienced significant cost inflation, inflationary pressure and supply disruptions related to the sourcing of raw materials, energy, logistics and labor in 2022. We continue to closely monitor the impact of, and responses to, COVID-19 variants, including government imposed lockdowns and permitted reopenings in various locations around the world, and the effects of geopolitical events on demand conditions and the supply chain. Demand conditions across certain regions in the Western Hemisphere and China deteriorated, creating uncertainty, impacting consumer activity and driving customer destocking.

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Average prices of energy feedstocks, particularly natural gas, which are a significant input and source of energy for our manufacturing operations, increased in the Western Hemisphere and particularly in Europe. We also experienced cost pressure on raw material inputs. We continued pricing actions intended to offset these inflationary headwinds experienced during 2022. Moderation of acetyls pricing trended to more normalized levels by the end of 2022. We expect sourcing costs and inflationary pressures to improve in 2023.

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

Following Russia's invasion, we have suspended sales into Russia, Belarus and the sanctioned regions of Ukraine. Revenue from these countries and regions constituted less than 1% of our consolidated Net sales for the years ended December 31, 2022 and 2021 and we have no manufacturing assets in these countries or regions.

Critical Accounting Policies and Estimates

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

We believe the following accounting policies and estimates are critical to understanding the financial reporting risks present in the current economic environment. These matters, and the judgments and uncertainties affecting them, are also essential to understanding our reported and future operating results. See Note 2 - Summary of Accounting Policies in the accompanying consolidated financial statements for further information.

•Purchase Accounting

We recognize the identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of purchase price over the aggregate fair values is recorded as goodwill. Intangible assets are valued using the relief from royalty, multi-period excess earnings and discounted cash flow methodologies, which are considered Level 3 measurements. The relief from royalty method estimates our theoretical royalty savings from ownership of the intangible asset. Key assumptions used in this method include discount rates, royalty rates, growth rates, sales projections and terminal value rates. Key assumptions used in the multi-period excess earnings method include discount rates, retention rates, growth rates, sales projections, expense projections and contributory asset charges. Key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal value rates. All of these methodologies require significant management judgment and, therefore, are susceptible to change. We calculate the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed to allocate the purchase price at the acquisition date. We may use the assistance of third-party valuation consultants. See Note 4 - Acquisitions, Dispositions and Plant Closures in the accompanying consolidated financial statements for further information.

•Recoverability of Long-Lived Assets

Recoverability of Goodwill and Indefinite-Lived Assets

We assess the recoverability of the carrying amount of our goodwill and other indefinite-lived intangible assets annually during the third quarter of our fiscal year using June 30 balances or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.

When assessing the recoverability of goodwill and other indefinite-lived intangible assets, we may first assess qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit or other indefinite-lived intangible asset is less than its carrying amount. The qualitative evaluation is an assessment of multiple factors, including the current operating environment, financial performance and market considerations. We may elect to bypass the qualitative assessment for some or all of our reporting units or other indefinite-lived intangible assets and proceed directly to a quantitative analysis depending on the facts and circumstances.

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In performing a quantitative analysis of goodwill, recoverability of goodwill for each reporting unit is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, tax rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment.

Management tests other indefinite-lived intangible assets quantitatively utilizing the relief from royalty method under the income approach to determine the estimated fair value for each indefinite-lived intangible asset. Key assumptions used in this model include discount rates, royalty rates, growth rates, tax rates, sales projections and terminal value rates. Discount rates, royalty rates, growth rates, growth rates and sales projections are the assumptions most sensitive and susceptible to change as they require significant management judgment.

Specific assumptions discussed above are updated at the date of each test to consider current industry and company-specific risk factors from the perspective of a market participant. The current business environment is subject to evolving market conditions and requires significant management judgment to interpret the potential impact to our assumptions. To the extent that changes in the current business environment result in adjusted management projections, impairment losses may occur in future periods.

See Note 9 - Goodwill and Intangible Assets, Net in the accompanying consolidated financial statements for further information.

•Benefit Obligations

Various assumptions are used in the calculation of the actuarial valuation of the employee benefit plans. These key assumptions include the discount rate and expected long-term rates of return on plan assets. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions. These differences may result in a significant impact to the amount of net periodic benefit cost recorded in future periods.

Pension assumptions are reviewed annually in the fourth quarter of each fiscal year and whenever a plan is required to be remeasured. Assumptions are reviewed on a plan and country-specific basis by third-party actuaries and senior management. Such assumptions are adjusted as appropriate to reflect changes in market rates and outlook.

See Note 12 - Benefit Obligations in the accompanying consolidated financial statements for further information.

The estimated change in pension net periodic benefit cost and projected benefit obligations that would occur in 2023 from a change in the indicated assumptions are as follows:

______________________________

(1)Excludes nonqualified pension plans.

•Income Taxes

We regularly review our deferred tax assets for recoverability and establish a valuation allowance as needed. In forming our judgment regarding the recoverability of deferred tax assets related to deductible temporary differences and tax attribute carryforwards, we give weight to positive and negative evidence based on the extent to which the forms of evidence can be objectively verified.

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The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to various assumptions and management judgment. If actual results differ from the estimates made by management in establishing or maintaining valuation allowances against deferred tax assets, the resulting change in the valuation allowance would generally impact earnings or Other comprehensive income depending on the nature of the respective deferred tax asset. In addition, the positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties.

See Note 15 - Income Taxes in the accompanying consolidated financial statements for further information.

Recent Accounting Pronouncements

See Note 3 - Recent Accounting Pronouncements in the accompanying consolidated financial statements for information regarding recent accounting pronouncements.