Good morning. And welcome to the Celanese First Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Surabhi Varshney. Please go ahead.

Thank you, Steven. Welcome to the Celanese Corporation First Quarter 2018 Earnings Conference Call. My name is Surabhi Varshney, Vice President, Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; Scott Sutton, Chief Operating Officer; and Scott Richardson, Chief Financial Officer. Celanese Corporation's first quarter 2018 earnings release was distributed via Business Wire yesterday after market close. Slides and prepared remarks for the quarter were also posted on our Web site, www.celanese.com in the Investor Relations section. As a reminder, some of the matters discussed today and included in our presentation may include forward-looking statements concerning, for example, our future objectives and plans. Please note the cautionary language contained in the posted slides. Also, some of the matters discussed and presented include references to non-GAAP financial measures. Explanations of these measures and reconciliations to the comparable GAAP measures are included with the press release and on our Web site in the Investor Relations section under Financial Information. The earnings release and non-GAAP reconciliations have been submitted to the SEC on Form 8-K. The slides and prepared comments have also been submitted to the SEC on a separate Form 8-K. This morning, we'll begin with introductory remarks from Mark Rohr and then open up for your questions. I'd like to turn the call over to Mark now.

Thanks, Surabhi, and welcome to everyone listening in today. I’ll begin with just a few highlights before opening the call for your questions. For the quarter, net sales rose 26% year-over-year and 16% sequentially to $1.85 billion. With strong pricing and volume support, we are pleased to announced GAAP earnings of $2.68 per share and adjusted earnings of $2.79 per share. Engineered Materials, Acetate Tow and the Acetyl Chain as well as our affiliates all reported strong results, continuing the trend that’s been underway for some time. Adjusted EBIT margins expanded by 300 basis points, achieving record operating EBITDA of $553 million and EBITDA margins of 30%. Engineered Materials reported net sales of $655 million supporting record segment income of $118 million, driven by projects, acquisitions and higher sales in Asia. Volume increased 19% year-over-year and adjusted EBIT margins for Engineered Materials came in at 27%. Affiliate earnings grew 26% year-over-year to $54 million. We saw strong growth in Asia and we commercialized over seven reported new projects this quarter. The Acetate Tow segment income in the first quarter was $78 million, declined a bit year-over-year as unique carryovers in the first quarter of 2017 could not repeat themselves. The Acetyl Chain grew 32% year-over-year and 18% sequentially, reported net sales of $1 billion for the quarter and record income of $253 million. Modest but consistent demand growth and high regional supply dynamics help lift pricing and generate the significant growth in earnings. Margins expanded to 24% as more than 400 basis points sequentially with strong asset and derivative pricing in all markets. For the rest of this year, we expect Engineered Materials to build on this success with more than 3,000 project wins with additional bolt-on acquisitions and continued growth in Asia. Earnings in Acetate Tow should step down slightly next quarter and remain at that level through the year. Consistent demand growth and business fundamentals through the Acetyl Chain should support earnings growth through ’19 and ’20. Given the strong performance in all these businesses, we increased our expected guidance and adjusted earnings per share to the 20% to 25% range over 2017. With that, I’ll now turn it back to Surabhi.

Thank you, Mark. [Operator Instructions] Steven, please open the lines for Q&A now.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Laurence Alexander with Jefferies. Please go ahead.

I guess, first of all, on the acquisition contribution to Engineered Materials. I know that you didn’t break it out specifically as a -- just embedded in the volumes and I think it was a few quarters ago you were talking about, you spoke about how you expect acquisitions to scale up overtime because they gave you more to push off on goal. Can you give us a sense for how much extra capacity you have in Engineered Materials or what investment cycle you need to do to support the volume growth you’re seeing?

Along with those acquisitions did come the ability to easily expand capacity without much capital, and we’re in the process of doing that and we still have some available. However, at the same time, we have a number of investments going on in both compounding and at least one polymer expansion that are underway this year and we expect more than in the future. So we’re doing both items, organic expansion and extending the capacity that we acquired through acquisitions.

And that fits Laurence within the $300 million to $350 million of capital that we projected for the next several years in previous calls with them.

And then secondly, can you update us on your thinking on the Chinese environmental tightening and the related shutdowns, in particular I guess how you’re thinking about the tailwind from ’18 into ’19 and ’20. Do you see it subsiding or do you -- what do you see as the longer term trend for the Acetyl’s business?

So I think if you think about the Acetyl’s business, you got to take a long-term view and you got to think of slow rates of change. So we have a business that is growing 2% or 3% per year, maybe accelerating little bit, so maybe 3% or 4% right now with that kind of percentages per year. And if you look back at the cycle, probably in the 11 time frame we peaked out and shelf capacity somewhere in there. So you have this big build up in China as you all know, Laurence, the 2008, ’09, ’10 where money was free and then we wanted to build a plant and then we want to convert coal, which is also for China. So it’s an easy conversion to make. Since then capacity has been relatively flat and we’ve seen that creep slowly build effective capacity utilization. And so imagine at 2% or 3% decline in that capacity over the time, the available capacity. So we thought ourselves today at the 80% range on average little bit above that, we saw a short term, short term being the last couple of quarters, some tension on that so maybe it’s 83, 84, 85 something like that short term capacity utilization. When we look at China per se and the regulations that are going in the host of those and all the regions that are impacted, we believe there is going to be 5% capacity reduction as that runs its course over the next three or four years, that kind of timeframe. So we think you got 5% coming off the top of that at that time. At the same time, you’re going to be from the bottom taking away another 5% or 6%. So there should be about 10% uptick net-net over the next three to four years.

Are you implying that you need to add capacity, I mean just as a clarification.

I think the incremental capacity, yes. We’re adding incremental capacity now as you know. And from my point of view as you get into some time in next decade, you will see capacity addition come off but it’s a long ways away. And today, I think what I’m seeing is incremental capacity as a way to go. The other thing you can do is you can look at find ways to bring in all toward the market. So that’s the thing you don’t see happening now. The tightness is going to be with us for a while.

Our next question comes from David Begleiter with Deutsche Bank. Please go ahead.

Mark, in Acetyl’s following to Laurence’s question. What the normalized earnings rate here absent the Q1 benefitted from the outages. And I think you said -- did you say you expect to see rates increase 10% in the industry going forward. So based on that, how should we’d be thinking about normalized earnings power in Acetyl’s over the next two to three years?

Well, we’re going to go into lot of detail on it in a few weeks and I don’t want to steal the thunder of that. We don’t have a normalized earnings and overview of that business, that earnings should grow and should continue to grow in that business for a good while. And so a lot of people think of this business is being cyclical, but I think if you really look out on the capacity point of view, it’s only going through one cycle in last 18 years by my math and demands being pretty consistent and it was just a way of build when that happened. So I think we’re moving back to a high capacity utilization scenario. And in that timeframe in the past, you would routinely see prices of Acetyl’s sales $10 a ton we’re nowhere close to level today. So I think you’re going to see it continue to grow David as we get out to the next two and three four years.

And just on Acetate Tow, Mark. Is there a plan B now post the JV being not going through?

Yes, I think we got plan B too. We have got B, C and D we’re working. So we said it’d be flat, we’re putting forth plans and we’ll share those with you guys to keep it flat through this next planning cycle through 2020. And we will share that when we get to the other in a few weeks.

Our next question comes from Frank Mitsch with Wells Fargo Securities. Please go ahead.

Just to follow-up on the Acetyl’s and the question about normalized and so forth. Do you have any sense as to -- given the fly up in -- firs off, I forgot to say, hey, congratulations on your new role Mr. Richardson. What do you think the fly up benefit was from the very tight market condition in Acetyl’s was in Q1? Obviously, there’s $231 million blew away any prior -- would you say $50 million, $60 million, $70 million of a short term benefit that you realized in the quarter?

I don’t know if we’ve looked at that, I am looking at Scott. I mean, the machine produced that number and if the machine wasn’t in place, we didn’t have flexibility and we didn’t have adaptability and we’re locked in a long term contract with cost plus basis. I am not sure what it would have been heck a lot less than that…

Frank, I would just add to that that really what's going on here is you do see the fundamentals improving, and like Mark said, those fundamentals will be improving over the course of the next few years. You can imagine that even within those improving fundamentals that you do get a little variability quarter-to-quarter. So there’s little extra sitting in Q1 relative to where we might be in Q2 but it's not a great deal.

It’s an interesting comment that you’re expecting Acetyl up in 2019 after setting up a very, very difficult comp for the first quarter so obviously, there isn’t a great expectation for you that that will continue to improve on the operating basis. And just if I could, free cash flow obviously was on the light side here in the first quarter. How should we think about the cadence of free cash flow to get to that over $900 million for 2018?

We expect that to catch up through the year. So what we saw in the first quarter was really just the timing of collection so about 40% of our Q1 sales occurred in the month of March. And so just from a timing standpoint, a lot of that collection pushes into April. Mark talked about the strength that we saw in Asia. We have slightly longer terms there, so that plays a role as well. And Scott Sutton talked about new capacity that we get for very little investment in our acquisition. One of the things that we do is really optimize how we produce and run on those assets, which is moving from what make the order model we had in those businesses when we acquired them to a better balance between make the order make the stock. And so you saw inventory tick up as well. In addition, we had a little bit of increase in CapEx to support the growth in the businesses. So those are really the reasons for where the free cash flow number came-in in Q1 and we expect to catch that up as we move through the year.

Our next question comes from P.J. Juvekar with Citi. Please go ahead.

I just want to go back to Acetyls one more time. I think you mentioned that -- or you were hinting that this business should continue to grow into 2019. But in your prepared remarks here, you’re saying that margins were 24% and you expect 20% margins for the year. So that implies some give back in second half. Can you just talk about that?

Well, I think we’re trying to range by this I think a little bit is we had 24% margin in the quarter and that was up 400 basis points over the prior quarter at 20%. I think what we say as a normalized margin rate for us is between 24% and 20%, somewhere in that for the year, I’m looking at Scott want to say that, but something like that. And so when you get pass margin, you got volume and so volume is a function not only of demand but also people are up or down I think like that, so you get a little bit of volume pull back as we get through the year and some of these going to start P.J. I mean that’s how we do the math, it’s not -- we're not contract down the volume basis effective take on a contract. So we’re real time in the market so we try and anticipate exactly what this market is going with that. We obviously have turnarounds, we have six different turnaround scheduled this year. We have couple of them occurring and coming up next month, that’s probably $30 million hit, that kind of thing, we don’t to talk about that too much. So those things happen and go through and we don’t think very much about and alert you guys not to as well. They don’t really -- long term they don’t really impact the numbers.

And now that the tow units called off, one of your competitors is taking tow into other products like fibers. I was wondering if you can talk a little bit about that. And there plans to shut down any capacity?

We talk a fair amount about it at the Investor Day with that right now, no. I mean there is some other folks that do a great job in fibers, they’re doing it long time we’ve going to get out that business. So I think it’s difficult for us to see running back in there. We have other applications that we’re quite proud of that pushes more to the polymer side and film side, and innovation out there is pretty cool pretty interesting we’re working on. The productivity things that we’re planning and we’ll share more of that as time goes on. And collection of all that, we believe plus strong performance in the China and then growing performance in China, we think that’s been washed out and we’ll be able to have three years or so of no matter what the market does pretty stable earnings -- by the earnings and there is still options for us to do other things. So we’ll share more of that with you. So I think the important thing that you should hear from me is that as it relates to cash flow from that business, we don’t see that changing over the next three years.

Our next question comes from Bob Koort with Goldman Sachs. Please go ahead.

When you guys contemplated strategy 3.0 for the EM business, do you anticipate you can continue to achieve those high single organic volume growth rates. And then what more do you need in that toolkit, either from a product or geographic standpoint? And can you talk about the staffing needs as you continue to grow that business so aggressively?

Well, I’ll make just a brief comment and then let Scott dig into that. But if you look at that business and the success that the team has had, we’ve grown earnings I believe $70 million, $80 million to $90 million year-over-year for the last three years. As you think in terms of this year, about north of $100 million to $100 million plus in that growth and that’s going to be embedded right that we have built in a model. So we see that containing so saying that this is a strong growth and strong contribution of business out there. We believe that the project model is, to the end, the S-curve is nowhere near curved out and then we have plans to lay curves on top of that with things like translation. So we feel really strongly that that model is going to continue to generate that high single digits growth that’s out there, and that’s a year-over-year basis not necessarily quarter-to-quarter. Scott, do you want to talk about process that where that business is going from a point of your products and markets and…

Look, I mean that business really is that up to not only extend earnings but grow earnings further. And to your question of what do we really need to be able to do that. Well, as you know, we have a pretty novel model there that matches up the robust market opportunity that we have really with the broadest solution set in the industry. So you'll see us do things like expand that solutions set. Some of that will be organic but it could be inorganic as well. There are a few polymers that we’re not experts in today that we can do that. We also have opportunity in other geographies, we already may not have a giant presence today and that’s a prime target for a bolt-on acquisition. I mean, the key to making this work is we have a great team running this business and operating in this business, and that novel model is our intellectual property. And that great team focuses on working on that model every day, improving processes so that we can be globally connected and solve solutions around the world for customers and that's what we'll continue to do.

And do you have any metrics, Scott, you can share around headcount, product, development, R&D. I mean, obviously, if you’re growing that fast, I assume it's got to be a burden on your internal staffing and growth there. Can you talk about how you achieve that?

I wouldn’t it’s a burden. Of course, I’d tell you more as a challenge. I mean the number one metric we have is well-known number of projects that we get wins on. We’ll get 3,000 purchase orders for new projects this year. But what will go up is our commercialization rate. We brought that from a lower level up to almost 45% today. We are adding some resources, Bob, but we also continue to get more efficient as well.

I’ll make a comment on that and to what Scott said. The focus here on efficiency is what’s made that model is being element we’ve needed in that model to make it work for the organization that we have absent that improving efficiency we’d start to top out that S-curve, so we’ve not done that yet. What we’re focused on now is other dimensions. So we think the classic S-curve, so you know the development phase, the growth phase and the maturation phase. As we move up that curve and this machine that gets better and better that machine, it’s important that we find way to translate more of these products, because translation is whole another dimension of efficacy of this model and we’ll talk about that in few weeks how we approach that, how we lever our success in one area to another area. And to be very honest, we’re just scratching the surface on that. That’s going to make our growth here happen without proportionate addition of resources because we just get better and better in what we do and it becomes easier for us to grow.

Our next question comes from Ghansham Panjabi with Robert W. Baird. Please go ahead.

Mark, I was hoping if you back up a bit and touch on the overall macro, you called that China as a driver for both Engineered Material and Acetyl. What about the other regions? How would you characterize global growth as we see it today?

Well, from a very high level for us, the entire world is doing well. We have strong business in the Americas and improving footprints across the Americas. We have very strong performance in Europe and great innovation in Europe, great connectivity with all the major OEMs and innovative OEMs in Europe it really drives a lot of growth in Europe and around the world. In Japan, we’re seeing stronger performance and we’re seeing more connectivity with the Japanese OEMs inside Japan with our team and that translates in the business outside of Japan as well. And then you get into China, China just continues to improve and it’s plastic material upgrade, a lot of work with autos there, while we work with consumer goods there, and it’s all to make them better for their local market. So we see every place doing pretty well.

And just second question, last quarter you pointed towards the legacy consumer specialty segment being flat on an EPS basis for 2018. Do you still think that will be the case in the context of the re-segmentation of food? And then can you update us on the EPS contributions from each of the segments given your big guidance raise for the year? Thanks.

We look at it as Acetate Tow now that we call it and we’re good stewards with that business, and we’ve been saying we’ll be flat for a couple of years and we’ve been flat for a couple of years, and it will be flat this year. So we’re able to manage that business in a way that we continue earnings in spite of the fact that there’s this gradual decline underway. I do want to mention that business is a lot common to date since we run through that capacity drop it occurred when the Chinese put in forth so much material, that’s almost fully on its course. So now you’re seeing more of a normalized situation. So we’re going to be flat this year and I think we can be in our way for the next three years, which is a basis of our plan. And you said the EBIT by segment, and so I’ll take a stab at it and Scott weigh a little bit. So Scott told you we’re flat you got that in Acetate Tow, it’s flat, so that’s pretty easy one to do. And flat for us it’s plus or minus $10 million something like that. So we’re not that good but flat is what would say that to be. If you look at the end business, we’ve already told you 100 plus that’s that business. And you get into 200, 200 plus and then the chains business and that’s going to how the math is going to work out.

Our next question comes from Mike Sison with KeyBanc. Please go ahead.

Mark, when you think about Engineered Materials, you’ve doubled the business since the last downturn, and you think about the pace of acquisitions potential. What do you see is the potential to grow this business over the next three to five years?

I think in terms of more acquisitions, there’s a broad slate of candidates out there, and we have a very big pipeline. And we are talking to 100 to 200 over the course of 12 months that we put through a funnel process. And you’ve seen us come up with and be able to match objectives. We said we’d be doing nylon and we’ve done nylon. Now, we’re looking even at other growth technology initiatives that we have. For example, medical, energy storage, these things we’ll be trying to find acquisitions that match up to those needs. But at the end of the day, there's a lot of opportunity out there, Mike. It's about finding the best opportunity and of course we’re going to pay the right value for these. We target around the multiple of 10. So there’s really not a cap on Engineered Materials. And you got to remember where call it 1% of global Engineered Materials business out there. So there is plenty of opportunity, it’s just a matter of us progressing on those.

If the 70, 80, 90 or 100 plus, I mean you look at 100, 100 and 100, and if you just look at the additive factor of that, that is the base model we have in place today. And we still have opportunity to make that work the way that’s work, we don’t see that changing, Mike. What we’ve not talked about is increased optimality that we’re getting as we go into business. The business is getting a bit tighter, so with a lot of these Engineered Materials the capacity is not longing it’s getting quite short. We’ve done incremental expansions under way. We’ll be adding more volume as we go through these next several years, so producing more volume which is a good thing. It’s needed by the market, very, very cost effective for us to do that. And we still not talked about a bigger deal that there’s couple of those out there that we continue to play with. So I think this business -- if you relate a straight edge on what’s happened the last several years that’s how I’d point it out.

And then in term of your outlook for ’18 in Engineered Materials, I think I might have missed. But your first quarter organic growth was, I don’t know what that was but for the full year, should be about high-single digits to maybe double-digits for organic growth?

Mike, I mean if you think from a volume standpoint for the full year organically, it should be in the high-single digits. If you think about what happened in first quarter, just think about it from a revenue standpoint, the acquisitions added almost half of that revenue growth and the rest of that revenue growth was organic.

Our next question comes from Duffy Fischer with Barclays. Please go ahead.

Question just on Ibn Sina started up early this year. Can you flush out how that’s going to roll through this year, how long it will take for that plan to fill out, how much was just the step-up in ownership versus -- again you’ve increased operating rates throughout this year. And then does that anniversary all the way through the first half of next year then?

I mean, we did start up that plan expansion there last year. We’ve been withdrawing volume from that in a pretty good cliff so far that supported our growth, it’s not running at capacity and it will take through this year or probably to get to that level. The earnings have stepped up a little bit and they will stay at that stepped up level through the rest of the year, most of that come from the increased economic ownership that we have there. It’s not going to be a dramatic step up. I mean there is even turnaround scheduled within that joint ventures as well, but you will see it similar to where it is in first quarter.

And then if you could just comment on the Slide 9, you talked a little bit about free cash flow from that slide. Can you talk about just cash flow from ops, the big step down each of the last two years from that base of high 200s and what’s in a way of that cash flow?

Duffy, it’s really just timing for us. We see again being greater than $900 million for the year. And so just what we saw from the strength of the business, particularly in the second half of the quarter, we’re collecting that now in April and we see that continuing as we move through the year. So we should catch up as we move through to the second quarter and into the third quarter and be back on that trajectory of being in excess of those quarterly -- how we track quarterly going forward through the balance of the year.

Our next question comes from John Roberts with UBS. Please go ahead.

With the benefit from trading activity and acetyls above normal in the quarter, Eastman didn’t come back until the start of the quarter. So I would imagine opportunities for trading was so high at the start of the quarter.

I don’t know what your question is. What do you mean trading?

Well, I think you said last year you traded the lease the equivalent of a world scale plan. It sounded like it’s all there…

I think our activity in the early in the year this year was lot more price oriented than volume was. Our volume we did trade some, we did move some third party volume in that period of time. As we get into this quarter still some pricing and some volume is going on.

And then you mentioned there may still be opportunities to extract further value. The Blackstone deal had operational synergies but I think it also gave you a path to potentially deconsolidate down the road. Do you think you could still find a path to deconsolidate without some merger deal?

It’s a bit harder. I think with EU it was just real disappointment. I’ll be very honest from really from an economist perspective there is no reason not to, for that deal not to occur. But the European Union had some funny views on this concept called overlapping. They just didn’t want to improve anything unless it was an overlap, which means basically you couldn’t hit the deal. So I think we see a path where we could do a deal in theory and have a path to European Union but practically it’s more difficult.

Our next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

I understand the first quarter free cash flow dynamics, but I just want to make sure I am clear on you raised guidance but the full year free cash flow if I’m correct you’re still calling for the same above $900 million. Is that just a continuation of the issue that is you have higher prices in AI, obviously higher working capital from an inventory and receivables perspective and you just have to get into a rolling period where that stays the same and then you get the release of cash flow.

I mean, that’s the best way to look at. I mean, there's really nothing fundamental going on that of issue. We talked a little bit about the rise in inventory from the M&A integration activity that’s going to continue. And then we expect obviously to collect that, again there is nothing fundamental. Terms are little bit longer given the dynamics we’re seeing right now, because we have more sales in Asia and we saw pricing move up in Asia, particularly through the quarter. And given the outlook that we stated for the balance of year, I think that’s how we see it flowing through. But we don't really see a fundamental issue in cash flow.

On an annualized basis, that’s right. I think the short term is where we spend a bit more on capital ratably right now than we have been last few quarters. So that was a little bit draw on the first quarter as well.

And just as a follow up, I can’t help noticing that oil is 75 bucks again. Where would TCX be coming, where would you get that going again? Is it much higher than current levels or how you’re thinking about that if you’re thinking about it at all?

We’re not really thinking about it at all. I’m looking at the team it looks like they’re thinking about not telling me about it. They look guilty over there, Vincent, I’m not sure.

It’s interesting. I mean, certainly, ethanol demand for fuel in China is up, there is still the questions over organic versus synthetic to get over.

China, can’t meet their ethanol mandate. And so I think they’re struggling with it so they could suffer something but we’re really not -- we’re not actually pursuing it.

Our next question comes from Arun Visawanathan with RBC Capital Markets. Please go ahead.

Just a follow-up on the guidance here, so the 20% to 25% EPS growth. Is there a way to characterize maybe how much is persistent acetyls upside or maybe the acquisition contribution or EM doing better than expected. I mean, I guess I am just curious as to the mechanism as to this coming back down, was lower ethylene may be a positive for your VAM margins in Q1 or…

I think, it’s just a rule of thumb, we can’t use -- you can’t be too specific with you numbers when you’re looking at big numbers like this. But in general for us broadly speaking, we've outlined that we’ve got a very good strong year in material and they’re off to a good start and we expect that to continue as we go through the year, so that’s 100 plus quantity with tows flat year-over-year plus or minus 10 million or 15 million bucks, something like it was flat. And then you get into the chain business and chain business has $100 million to $140 million first quarter, I think we’re $200 million plus for the year. So you’re going to see that moderate a bit, but it doesn’t mean a lot of business is not really strong. I mean that’s subtle movements in pricing and then incremental volumes and things like that will moderate. We got a bunch of turnarounds to do in those, each one of those process and offer $10 million to $15 million and we have six of those. So that will all be plugged into that scenario that rolls out as we go through the year. So you should expect a stronger first half than the second half, but you should also expect that the next year is stronger than this year.

Mark, I would just add to that look I mean, the business strategies are working and materializing. And there’re good concrete fundamentals underneath all three businesses and that’s why we’re confident in saying that this will continue. I mean the acetyls team continues to implement their model and so does the Engineered Materials team. So you see that moving forward.

And then on the acquisition pipeline, you mentioned compounding earlier. I mean are there any other particular substrates and capabilities you're looking for? And what -- you saw that the plan to use the other half may be for buybacks or maybe just reiterate your plans for cash there?

On the buyback question, we haven’t really made a decision and that we’ll share more in the weeks ahead, so that plan is on share buyback and that’s in part because we see lots of M&A activity theoretically in front of us, so we need to sort through that just a little bit. I’d really not say which molecules are going after and things like that and the M&A. What I will say just echo what Scott has pointed to is that we tend to look at initiatives and that can be a polymer based initiative, which go into heat and go into nylon and so that was just big initiative we’ve been on. And we’ve gone from being a small player in there, I think perhaps the largest independent compounder of nylon, if not we’re pretty close. So that move we made we know how it moves like that underway in medical and energy storage and things like, so we’ll see how those unfold.

Our next question comes from Jim Sheehan with SunTrust. Please go ahead.

I’d like you to clarify on acetyl intermediate side. Was there any in your discussion or trading activity, was there a one-time trading gain or loss in the numbers for this quarter?

The answer to that is no. But what I will say is that we have this globally connected model that we go out and activate the network and we measure how we’re doing and how we’re growing by how we activate that network and we continue to increase those number of activation. But there is no specific one-off trading gain or something like that I just want to be clear about that.

And then in Engineered Materials, you talked about how you see margins progressing over the next few quarters. When you’re adding in acquisitions, you‘ve out talked about those being dilutive. Do you expect to completely offset that dilution and to actually expand margins? And also with the re-segmentation, how should we think about margin runway in that business?

As well as we’re running bolt-ons, I mean you can expect that margin to be around 19% to 20% without the equity income from the joint ventures. We get a little bit in dilution, but we’re recovering from dilution from previous bolt-ons we did. If we weren’t doing bolt-ons, you would see that come up a little bit. As far as the re-segmentation where we put the food ingredients into the Engineered Materials business, because the project pipeline runs in a similar fashion and you got to think in terms of maybe that’s 5% of the overall Engineered Materials business, so it’s really not impactful.

And how dilutive you expect business to this segment?

It’s not dilutive, similar.

Our next question comes from Hassan Ahmed with Alembic Global. Please go ahead.

Mark, question on the AI side of things. You in your earlier remarks talked about volume growth being quite robust in Q1 and then not being strong over the next couple of quarters. So just trying to get a sense of what volume growth we should expect. It seems that you guys generated 5% year-on-year volume growth in Q1, which seems relatively normal. So I am just trying to understand on the volume front what we should expect for the remainder of the year?

I think we believe that 3% to 5% if you just look out over the next several years should be a pretty average growth for us. I am looking at Scott, but quarter-to-quarter that can be up and down, and that’s what I think we are. And if you look back over your shoulder, it’s been more like 1% to 2% so it doesn’t take much to make a real difference and we have a number of these pretty incremental expansions we’re doing. And so we can secure that volume and we can also build into that volume in the way where we get very high return. So we’re seeing that volume picture for us and we’ll share more about that in a few days that a big part of our continued growth in earnings in this business.

Now, the methanol side of things, seems to be are continue to be quite strong, price is high, supply-demand seems to be relatively tight. So any further thoughts about a potential second facility in the U. S.?

Well, we continue to look at it. I think it’s not -- it doesn’t hit the level of these other things we’re doing right now. But it’s certainly -- it remains a very, very viable project and we’ll just keep you guys posted on it.

Our next question comes from Kevin McCarthy with Vertical Research Partners. Please go ahead. Mr. McCarthy your line is open.

This is a Matt on for Kevin. Just looking at the proposed Chinese import tariffs on plasticized cellulose acetates, I mean, I know you have four tow facilities under JV with CNTC locally in China, I guess expected to attain to you specifically on a company basis. But what do you anticipate will be the fallout on an industry level if there is any?

I mean, what I would say is you’re right. I mean most of those joint ventures are back integrated in that. We supply a little bit in there but we actually supply from outside the U.S. from another facility. So we’re not impacted. Other acetate does flow into China there, so there could be some impact yet to be seen.

I would say on that too Matt is that the volumes are pretty low now for everyone. I mean, it’s not -- I wouldn’t get too worked up over that.

And then as a follow up, I guess, you buy a fair amount of ethylene for your VAM and polyethylene production. I think we estimate you somewhere around like 1.25 billion to 1.5 billion pounds a year. I mean, ethylene prices are historic lows. So is that a tailwind for the quarter or do you anticipate this to be a larger for 2Q and do you have a spot buyer or contract buyer?

As we look at it around the world, you’re right, we bought a lot of ethylene in Asia, we bought a lot in Europe and we’re buying in the U.S. as well. U.S. that’s a lot of pass-through tied to raw materials but most of that’s covered in pass through. So we don’t see a lot of impact of ethylene, especially in the U.S. that’s really have much impact on.

Our next question comes from Aleksey Yefremov with Nomura Instinet. Please go ahead.

Coming back to Engineered Materials, where do you stand in your efforts to raise prices? I think, you're pursuing that earlier this year and you’re continuing to raise in second quarter. And also where do you stand in realizing the full benefit of the recent acquisitions that you made? What’s the level of accretion that incrementally in terms of EPS or margin that we can see later in ’18 or in 2019?

In terms of pricing, we’re having some success raising price, you can see that sequentially, prices has come up and we’ve just announced another round. They’re in the process of implementing those prices. And we expect to be successful with most of those increases. Second part of your question was what topic, remind me again…

Recent acquisitions in Engineered Materials. Are you fully realizing the benefit of integration or is there some incremental benefit?

There is incremental benefit left. I mean maybe we’re a third of the way through with integrating those three acquisitions. I won’t give specific numbers but remember we went back and said that look one or two of those added $0.10 a share in the first year and another one maybe added $0.09 a share. So everything is progressing to plan. But at the end of the day, those will double, triple those values over the course of the first three years, that’s the way to think about it.

Steven, we will now conclude the call. Thank you for your questions and for listening in this morning. We’re available after the call to address any further questions you may have. Steven, please close the call.

Thank you. The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.