Good morning, and welcome to the Celanese Third 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] Also this event is being recorded. I would now like to turn the conference over to Surabhi Varshney, Vice President of Investor Relations. Please go ahead.

Thank you, Anita. Welcome to the Celanese Corporation third quarter 2018 earnings conference call. My name is Surabhi Varshney, Vice President of Investor Relations. With me today are Mark Rohr, Chairman and Chief Executive Officer; Scott Richardson, Chief Financial Officer; and Scott Sutton, Chief Operating Officer. Today’s presentation includes statements about expectations for the future results and plans that are forward-looking statements. Actual results might differ materially from such statements. And additional information concerning factors that could cause actual results to materially differ can be found in the posted materials. We will also discuss non-GAAP measures today. You can find information related to these non-GAAP measures and reconciliations to their comparable GAAP measures on our website in the Investor Relations section. Form 8-K reports containing all these materials are available on the SEC’s EDGAR system. Celanese Corporation distributed its third quarter 2018 earnings release via Business Wire and posted slides and remarks about the quarter in the Investor Relations section of our website after market close. Since we published our comments yesterday we will now open the lines for your questions.

We will begin the question-and-answer session. [Operator Instructions] The first question today comes from P.J. Juvekar with Citi. Please go ahead.

Yes, hi.

Good morning, P.J.

Every week I get some kind of price increase announcement from Celanese in acetyls. So my question is, how are your paint coatings and polyester fiber customers taking this price increases? And I guess, you’ve been leading the market in acetyls, if there is new capacity that comes in, would that sort of upset the apple cart in terms of the discipline?

Hi, P.J. This is Mark. Thanks. Let me back up a little bit. I think there’s over the years people have kind of you know made fun of our price increases, but we did that for a reason, a very specific reason. When you deal with customers, my personal experience is customers don't mind pricing. They just don't want to be disadvantaged or surprised. We go to great lengths to very openly share what's going on in the market and how we're responding do that and with great lengths working with individual, with customers help them moderate and manage and deal with those price increases. So broadly speaking, that's why you see us do what we do and because of that we have found that our customers always respond well to what we do and I mean sometimes, it's tough, but they always respond well. We've not seen any unusual pushback or anything else from pricing and if you look at the level of inflation, we're seeing that P.J. you've been going around a few years, you've seen lots of cycles at inflation, it’s not that severe. There are different areas where it's hitting us, but it's not unusual nor is it anything that few years ago we didn't see in a routine kind of basis with multi-hundred million dollar year-over-year kind of the raw material inflation number. So, I know there's a lot of worry about that out there, but I don't quite -- I can't quite quantify it and I don’t know why people are so concerned about it. You got to work hard to stay ahead. We do. We work properly with our customers, but we haven't seen any particular issue with it. And I roll it back to say as you relate to polyester, no big issue, no big issue there.

Yeah, don't get me wrong. We appreciate your price increases and admire that you are able to raise pricing and recover raws.

Yeah. No I didn't take it that way. I just want to make sure, that people understand that, that we do that, but we're a bit more public than others, but we would do that on purpose and we do it for a reason and it’s really just to focus in and help our customers.

Right. And then just Mark, good question on your guidance for 2019. You mentioned that gains in EM engineered materials would be offset by winter seasonality. I was wondering if you can just explain what do you mean by winter seasonality? Thank you.

Well it’s -- thank you, PJ.. Those of you that have followed things like the coating businesses in China for a while, understand that you go through these seasonality kind of periods. And classically, in our business segments, you would have weaker winter seasons or fall seasons fourth quarters and weaker first quarters and that varies between would vary between coatings businesses in Europe, Chinese New Year, seasonality and auto builds. So a lot of things that kind of roll into that generically. It's not a big deal. It is just a natural kind of event that would occur similar to week sales in Europe in August. It is something that happened. So, what we saw last year though which is a bit unique is we didn't see -- we didn't see that. We kind of powered through first and forth and there were a lot of subtle reasons why that is. We believe that we're returning to that kind of normal movement. So, again it's not a big deal other than the fact that we didn't have it this year as we started the year. So, that's all we're saying there. That means that fundamentally we would see our -- over the next several years, we'd see is have stronger middle -- mid-cycle earnings year than in end of cycle, beginning at the end of the year. That's all it means P.J.

Okay. Great. Thank you.

The next question comes from Jeff Zekauskas with JPMorgan. Please go ahead.

Thanks very much.

Good morning, Jeff.

Hi good morning. I noticed in your AI business that your volumes were lower sequentially and my memory was you had all kinds of outages in the second quarter. So, why were your volumes sequentially weaker?

Yeah. So, hi Jeff, this is Scott Sutton. Look I mean, we don't worry too much about sequential volumes win as you know we run a model there when we go out and activate our network. So, sometimes we're in stronger in a certain derivative and sometimes we're out of that. You really have to think about the whole year for the health of the business and for the whole year even volumes in that business will increase.

No, you will - it's a very tight market. So, and you had a very strong year-over-year pricing and you had very good sequential pricing. So, were you trying to maximize the profitability of the model in the third quarter?

We always try to do budget, every minute of the day we try to do that. And we're, we’re in the market in quite a few hundred thousand tons per year in terms of bio resell, in that process. It wasn't necessarily unusual this quarter, that activity but maybe a little bit more unusual. But yeah we always try to make good decisions to maximize the profit for our shareholders.

Yeah. And Jeff I mean I would really encourage you to think about the whole varsity of change from a volume standpoint, not just what’s shown as the AI segment and think about that on an annual basis as well.

Okay. Great. Thank you so much.

Thank you.

The next question comes from Robert Koort of Goldman Sachs. Please go ahead.

Good morning.

Good morning.

I don’t know for you or Surabhi or Scott, but I thought the comprehensive review you guys put out was excellent and it helps answer a ton of questions ahead of time and I really appreciate limiting your formal conference call remarks to none so we can ask questions. I wish all companies would approach it the same way. Let me ask my two questions if I could. First on, I guess for Scott on -- Sutton, on the EM model do you guys feel it's more of a product's expertise or process expertise and I guess the question is really aimed at can you bring in other, can you start going maybe down the pyramid to more commoditized or maybe less specialized plastics but employ the same process for the same success or do you think it's limited by the types of products that you sell through EM.

Well Bob, I mean really the real intellectual property in that business is the model right, now how that manifest itself is being able to go out and match up our broadest solution set to the largest number of customer needs. I mean clearly, we do well where there's a little bit more sophistication needed, right, by customers, but that also applies to what I'll call mid and lower range products as well, it's not exclusive only to those super sophisticated products.

Got you. Okay. And then I thought you had a very interesting point about your auto demand relative to auto builds. Can you give us any sense from the outside how we can try to predict and calibrate your growth in that market, when it seems to be so detached from OEM build rates?

Yeah. Yeah. I mean, Bob you know even across – across all markets, right, where we’re not necessarily dependent on absolute growth of the driver volumes in this business. But you've got to be able to think about sophisticated solutions and sometimes when volumes are declining like they did in auto in the – in the third quarter, there's actually a bigger drop for unique solutions for cost savings or whatever it is from the customer. So I can't give you a way to connect to that. What I will just say is that, we grew every single market segment and that's the plan going forward as well.

Great. Thanks very much.

Okay. Thanks, Bob.

The next question comes from John P. McNulty with BMO Capital Markets. Please go ahead.

Yeah. Good morning. Thanks for taking my question. Look, there's been a – there's been a lot of movement in the – do you see the gas prices in the middle year. We get that you guys don't naturally trade on spot. But I guess, how are you thinking about, how pricing moves as we get into the fourth quarter and into 2019 and as far as 2019 goes when you think about year-over-year, can it be up, flat I guess, how are you thinking about it?

Not a lot, but it’s what I would say, John. We work in that market to try to -- I mean with all the molecules to try the mark the net value back to our corporation. Classically you would see a drift down in pricing a bit and pour off a bit in the first. And we certainly started seeing a little bit of that but that – there’s been announcements by local Chinese companies actually driving pricing back higher in China, which is a bit unusual. So we -- Kevin, I guess I’d say we stop thinking about it too much. We think more about normal seasonality, and normal seasonality would say there won’t be a little bit off in the fourth and little bit off in the first, stronger in the middle quarter. So that’s how we’re kind of looking at this normalized view year-over-year rather than in absolute dollar per term price. So Scott do you have any further thoughts on that?

Yeah, Mark. I mean I would just add that the way pricing comes about is by the number of activations we’re able to do to our network. And you’ve seen us increase that metal increase next year. And underlying all of that is fundamentals are still okay, effective utilization is still okay. So if you put those two things together I think it’s an okay situation.

Got it. Thanks very much. And then just a quick follow-up. You’d indicated in your I guess your outlook for 2019 that there were going to be potentially some I guess the cost of some several large plan to outages. I guess how should we be thinking about you know the I guess the delta or the bogie between 2019 and 2018 in terms of --

About $50 million, about $50 million. So there’s – we have a huge internal turnaround, where we’re expanding the rebuilding from an efficiency point of view, one of our POM assets in Ibn Sina. That's a very, very large turnaround and those are quite expensive.

Great. Thanks very much.

Sure.

The next question comes from Kevin McCarthy with Vertical Research Partners. Please go ahead.

Yes. Good morning. With regard to Engineered Materials, you’ve put forth a goal of having 5,000 projects in 2020. Can you speak to two aspects? First, how do you expect the average project size to trend between now and then? And then second, what sort of level of acquisition activity do you need or not need to achieve that level?

Yeah. Go ahead.

So, Kevin, this is Scott Sutton. In terms of size of average project, I mean that's going to trend where it's been trending in the last couple of years, right. We are going to increase the number of projects that we close or get a purchase order for taking it up to 5,000 by 2020. We do have some assumption of one or two bolt-ons a year between now and then that helps add to that pipeline. Most of it comes through organic growth though.

Okay. And second question if I may on capital deployment. You raised your 2020 earnings goal to $12, up from I think $11 at the time of your Investor Day in May. Can you update us on what amount of capital deployment is embedded there? And my recollection is that it was excluding repurchases, but inclusive of some bolt-on acquisitions and I guess related to that your press release indicates an ability to accelerate repurchases. Obviously the market has been shall we say a little choppy. And what are your latest thoughts on that subject?

Yeah. Kevin, this is Scott Richardson. So what we said in Investor Day was that we expected CapEx to be in the $350 million range for the next three years. We’re going to probably come in around $330 million this year just with the timing of how it flows through. But we made the announcement on the POM expansion, we have several other very attractive productivity and growth-driven projects that we're looking at. So we're actually expecting that as we get to the end of that three-year window that CapEx will actually tick up higher than that $350 million level we’ll probably be kind of in that range maybe plus or minus a little bit next year but we should be up to higher levels beginning in 2020 and beyond. And that should just translate to continued earnings growth again through productivity and top line growth going forward. And then on repurchases, yeah, our cash flows been very strong this year. We stated this quarter that we expect to approach $1.2 billion of free cash flow and so we do have the opportunity just given where the market has been to accelerate some of those repurchases that we had originally stated, we had said we were going to do a $1 billion over the three-year period from 2018 to 2020.

Thank you very much.

Kevin, this is Mark. Just real quick on two of those topics, it's a bit of a add-on to what Scott has said. I don't know that we've really explained well enough the opportunities that we have to incrementally expand our assets, and in most cases, Kevin, we can get a phenomenally term with no incremental volume which we have enough productivity opportunities in front of us. And I know that's a little bit hard to conceptualize but when you have a global network of assets and you're playing in a number of different fields as it relates to raw material values across energy cost, logistics cost today which are up over $60 million over two-year period corporately for company like ours. There is tremendous value that can be created that way. And so, we have a series of those that we're evaluating and seeing up you’ve seen some of those announcements that are giving returns from the 25% to 45% kind of range largely independent of material volume there. So, you should expect more capital going into that. And so, we haven’t put out a number yet we’ll I think predominantly maybe, more January Scott on kind of what we see out there but certainly near-term that 350 kind of number is fine, but as we get out the 2020 timeframe may be its higher than that. Getting back to cash we've reported this ability to press would be roughly around $1.2 billion this year. So, you would expect that to grow as we go out to the next couple of years. We’ve targeted $3.6 million. We're going to work hard to see it’s higher than that, we think even a constant earnings we have the ability to kick out more cash. So, we're going to look for find the ways to invest that cash in phenomenal opportunities for us. We're staying on bolt-on acquisitions, but we think, we’ll be able to finance yet pretty easily with the cash coming off the business and then beyond that we'll look to make sure, that our dividend policy reflects our much higher level of cash flow in the share repurchase and accelerating those as Scott had said.

I appreciate the additional color.

The next question --

Anita, could you do that again please?

The next question comes from John Roberts. Please go ahead John.

Great. Thank you. Could you update us on any progress in replacing your filter tow deal that you have with Blackstone with an alternative transaction of some sort?

We're still working on that, John. It's not a lot of options out there. We haven't found one yet. I remain convinced as that’s Scott and Scott that there are opportunities for us to do things out there may be more structurally based on our manufacturing, but we're working hard to try to find opportunities.

Is there any risk for a second inventory correction in filter tow given the sort of general weakness in China or do you think inventories are low enough there that we don't have that risk right now?

We're pretty comfortable in inventory levels were fine. We don't see that as being the risk, we've been a team that's been active on trying to drop pricing in the world. We have some traction with that which is good. And then of course, we need that to offset some of the volume declines that are naturally occurring in the business, not dramatic, but that normal 2% per year.

Okay. Thank you.

Thank you.

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

Thank you. Thank you. Good morning.

Good morning, David.

Just on China, are you seeing some signs of slowing or softening in the economy. And just on these winter shutdowns, I think in your prepared comments suggests that they might be even more severe than this year, but I mean perhaps they could be less severe than last year due to the need to stimulate the economy. Give us comment on that?

Well, I think all three of us here would have slightly different version of it. So I think I'll give my spin, and then Sutton and Richardson can follow. But I mean if you read publication, China’s coming up reporting a little bit lower numbers. For those of us that have had to make a living out of China for a long time. We never – that’s how we believe the prior numbers anyway. So, I don't know quite what to read of whether 6.5% growth or 7.5% growth myself. From my point of view we don’t see any dramatic slowing in China. And we can say guys is that fair But, yeah?

Yeah. I mean this Scott Sutton. I mean our project pipeline is increasing nicely in China...

Yeah.

In fact and that's where a good bit of the growth has come from even, even in the last quarter in China. And half the deals we've been able to make a lot more moves or activations as well, so it's really quite active.

So, so if there is a slowdown occurring I think it's occurring in a thoughtful way in a way that actually enhances commerce. Doesn't detract from commerce or a place to our business model strengths, I mean another way of seeing it, out there clearly. Absolute dollar sales has gone down, but the need to dramatically improve the quality of all those is kind of off the chart. So, so we've not – we just don't quite feel it, is what I would say.

Got it. And mark just on your M&A pipeline, I know you acquired Next Polymers announced that. How's the rest of the M&A pipeline looking for this year and even next year?

Scott you want?

Yeah. David, I would say that we still have a healthy pipeline particularly in Engineered Materials and there's good opportunity to do some meaningful bolt-ons next year.

Thank you very much.

Yeah.

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

Hey good morning. Nice quarter there.

Thanks, Mike.

Mark, in terms of auto just curious how much left is there to do in a car. I mean is there a lot of opportunity to continue to convert parts and plastics and what are you converting now and what’s the opportunity do you think over the next couple of years.

Yeah, it’s infinite. I mean what’s the car of the future is going to look like, is – probably going to be extruded hard to guess. I mean so no, we see I mean you can only imagine the You can only imagine them the thousands of connections, the thousands of discrete parts that go into autos, each one plays an intrinsic role and the quality of that vehicle, the aesthetics of that vehicle, the efficacy of that vehicle, the fuel efficiency of it, and what the other dealers are always doing is trading off those value equations. The price of steel is not constant, the price of aluminum is not constant. So you're always getting into a refinement removing of that alleged vacation is really exciting for us not only in the lithium energy packets pack alone but the housing for that, the connectors that are going in that, the design of the new consoles for this vehicles, the reduced weight which dramatically expands the application of reinforced on the plastics and in structural parts. So it's – and I'm sure there is a limit to it but I kind of don't know what it is.

Okay. Great. And then, when I think about the 2020 outlook for the segments you know that Acetyl Chain seems to be pretty much there, can you maybe walk us through some of the upside potential over the next couple of years there, and maybe downside as well?

Well, the upside potential of that business really is volume. You got an industry that's running in the mid-80% capacity utilization that has a history of losing on average three production assets per year, if you look at kind of the run rate of upsets in this business it's – the average is pretty close to really world-scale assets per year are out. So think about 1.5 million tons out of a 16 million ton, 17 million ton, 18 million ton market. Last year we were probably 2.2, 2.3 something like that, so it’s a little bit unusually high from that point of view but that that 100 year storm last year happens every three years, four years, five years. So we think we're in a period where the business is going to be tight. We also think that the loose monetary policy of China which will led to the one negative cycle we had in this business is gone and I think been gone for good with the Blue Sky campaign but also the need to get a return on your investment and frankly the inability of China to compete outside of China. So we see ourselves moving from one dip that lasted a long time to one upcycle that’s going to last a very long time. And for us it's going to be solid pricing incremental volume growth. It’s all --

Great. Thank you.

Sure.

The next question comes from Ghansham Panjabi with Baird. Please go ahead.

Hey, guys, good morning.

Hey, Ghansham.

Hey, Mark. Just to expand on that last point. So you noted Acetyl capacity utilization in the mid-80s on a global basis in 2018. Do you expect that to get higher in 2019 or stay around the same? It just seems like things were a bit tighter in 2018 given some industry disruptions and force majeures. I'm just trying to get a better sense of how you're thinking about 2019 specifically.

Well, when we do these kind of things, we don't really fantasize about things on the fringe that could happen. So we kind of look at it as being pretty similar to this. I mean demand will creep up a little bit, but we're doing like a slight incremental expansion. Others may be doing a little push down more volumes. So we think it's going to stay for the most part in the mid-80s, maybe creep a one turn or something.

Okay. And then on the EM segment, operating margins inflected higher year-over-year for 3Q after several quarters of declines due to both high raw material costs and also some of the initial dilution from acquisitions. Looking back at 2016 margins were sort of in the mid-30s range for that segment, when do you think you can get back to those types of levels or is the mix of the business just different versus back then?

Yeah. I mean this is Scott Sutton. Look, I think where we’re operating right now particularly this most recent quarter is like a good healthy place for that business to be, because we can grow it at that level, we can add on bolt-on acquisitions and life their margins up and really add a lot of value to the company. To me, it’s healthy where it is.

Got it. Thank you.

Thanks a lot.

The next question comes from Arun Viswanathan from RBC. Please go ahead.

Good morning.

Good morning.

I guess just wanted to understand maybe the raw materials picture. There was some increase in some of the feedstocks over less than a while. Would that have any impact on you guys going forward given your ethylene purchases?

Ethylene specifically -- on ethylene, yeah, look I mean -- okay, I’ll answer it more broadly. Okay. I’ll answer it more broadly. I mean the reality is if you look at third quarter every single business, right energy and raws went up every single business really we’re able to cover that off with price. So look I mean we could feel somewhat impacts from that, but I think we’re set up to completely cover that up.

And then, just kind of just understanding the three-year outlook on an earnings basis, what kind of cash deployment do you have in there and how’s that split bit between buybacks and acquisitions?

Yeah. I mean like we said we have a $1 billion earmarked for buybacks at this point in time and we will bring some of that forward in front loaded. We will continue to deploy cash back into the business as our first choice through organic investment. And we had earmarked $1 billion and we said that may take a little higher than that towards the back end of these three years. And then on acquisitions we’ve said about a $1 billion for acquisitions over the same period. So, no, we haven’t done on a regular basis but this year we haven't done at that level but, as Scott said, we have some attractive things that we see potentially coming next year.

Right. Is there capacity to increase those given the over $3 billion that you could generate over three years?

Sure. Yeah, absolutely. And we're going to continue to be opportunistic with what's in front of us.

Okay. All right. Thanks.

Thanks a lot.

The next question comes from Laurence Alexander with Jefferies. Please go ahead.

Hi there. Two quick ones. On EM you'd normally don't discuss trends on a regional basis and so I'm just curious as you think about the way the project pipeline is evolving if the large customers start re-jiggering their global supply chains over the next two years, three years would you see any hiccup in the pattern or how would you flex to adjust for that? And secondly, Mark, your comment about productivity and taking advantage of more opportunities across the system, some companies characterize this in terms of spreads and some characterize it in terms of taking advantage of volatility, and a few years ago you used to talk about having a $100 million or so several chunks of headwinds that would happen under the surface and you would try and offset them is the issue sort of spreads or volatility, or is it just that there is fewer adverse areas of lumpiness that we've seen in the last few years?

So, Scott, why don’t you take the first one which has sounded sort of –

Yeah.

A view of changes in the world and the supply chains moving around and what impact that would have on the others.

Yeah. Sure. I mean, Laurence, so in our EM business, I mean, we are growing in everyregion and yes, you see very short periods where it's slower in one than the other, but we are positioned globally to put out solutions that move our supply chain around as we need to. So we don't see any kind of rejiggering of customers supply chains and so forth impacting that business at all.

Okay. So you asked a lot of questions Laurence on the last piece. So I’ll try to start with productivity and carry that forward. So some folks on the call may not -- may not remember that the 2012, 2013, 2014 kind of timeframe there was tremendous headwinds that based our confident, orders of magnitude $500 million between methanol and the loss with southern contract. We had a huge step change almost overnight and FX it was really big impactful for us. We had gone out in a very blissful way and they claim to profitability from ethanol surely wasn't going to happen in there. Through that period we overcame those with a very strong productivity effort in moving our business models and had double digit earnings as well through that period. Since that time we have doubled the profitability of this company three years we have doubled the profitability of the company and we've done that in a real fundamental way employing these business models, directly to leverage our ability to manage complexity just out there unless complexity that can be to volatility, it can be from straightforward movements, it can be an EN business is related to the opportunities we bring these customers to create unique solutions and therefore differentiate themselves in the marketplace. Those models have been more and more refined we're going to another element of full refinement today based on a learning for the last 12 months, 18 months, and we think those models have yet to fully realize our potential. So we don't – we say right there that's utilized on a pure productivity through that period of time if you look at it over the last couple of years we've actually dropped our net productivity contributions. And that's not because there's not opportunities…

Yeah. Perfect. Thank you.

Thanks.

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

Yeah. Good morning, fellows.

Good morning, Duffy.

Quick question. A couple of years ago, your Singapore plant was fairly uncompetitive in a low oil environment, and then you had redone your carbon monoxide contract with Linde making it competitive. Do we need to worry with rising oil prices that that plant can become uncompetitive again?

We are -- it’s very dependent on oil and as it relates to the bunker fuel and as you know that's gone through its own set of volatilities around concerns or not concerns but uncertainty about how to manage the move to a low sulfur bunker. So, yeah, as that unit gets pressed, it's going to be a little bit less competitive. It's still a good unit for us in operation, one that you could enter a period if we get back above 100, but that unit is less competitive. Having said that, we have opportunities to do other things that can surface without. So we don't – we're not particularly worried about.

Yeah, and we did do some things a few years ago as you alluded to, Duffy. That does give us a little bit more flexibility in the high oil environment. So we are exposed, but not as much as we were in the past.

Okay. And then the announcement you made on Germany. Can we read into that …

Duffy, you're breaking up a bit. Can you repeat that? Read into that --

Duffy, you're breaking up a bit, can you repeat that, the announcement with our --

All right. I was just going to say with the announcement you made on Germany can we read into that? Did the Ibn Sina plant did is now on stream is filling out pretty nicely. And then if that's fair roughly how much has it been seen it contributing year-over-year because we're still annualizing I think to bump up in your ownership stake there?

Yeah. Duffy, this is Scott Sutton. So I mean the announcement was made in Germany about expanding that plant right is strictly because you know we're in a real healthy business situation there you know demand supply tight and palm and it's time to add a little bit. And yes I think you can read into that that the Ibn Sina POM plant is running very satisfactory. We do see our equity earnings in that business up, almost all of that increase is due to better performance at Ibn Sina.

Great. Thank you, guys.

Thank you.

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

Thank you. If I read your prepared comments correctly I saw you called out 4% organic volume growth and in EM and in the sense to get back to 69% and then I guess that the 4% was maybe due to some of the pricing. I'm just curious are the customers buying less from you or are they buying more from others or so there's a push out of demand around pricing or did you actually see some share for the meantime?

Yeah. Well really I mean the main driver of that and he can't look too much at quarter-to-quarter. But the main driver behind that was we have lifted price quite a bit to overcome the raw materials inflation so you know we ended up being successful at getting all that price and still growing volume as well. So I don't read any kind of fundamental shift in demand in that.

Okay. Just as a follow-up on the goal of the 5000 project wins, how would you characterize – do you have to have the intellectual capital needed to get to 5000 projects at a time and do you have the sort of physical R&D footprint necessary or would that be more investments in people and facilities necessary to scale up that way.

Well, we I mean we continue to invest in people. We have a very good team growing each, each day in terms of capability. We continue to invest in R&D. A lot of it is incremental capability as we improve the model as well.

And then on the physical side of things anymore...

Yeah, on the physical side of things I mean, you've seen us make quite a number of announcements. We are in the process of expanding compounding capability in at least four or five sites. We’re expanding two of our polymers that we've made announcements on, as well both POM and our GUR ultra high molecular weight polyethylene. There'll be some more of those.

Okay. Understood. Thanks very much.

Thank you.

The next question comes from Jim Shehan with SunTrust. Please go ahead.

Thanks. In the engineered materials or organic growth, you just spoke to the deceleration that occurred because of the higher pass-through of raw materials. It sounds like you did quite well in automotive. So which end market actually experienced that demand destruction, was it medical, was it industrial or something else. And what gives you the confidence in getting a reacceleration in that organic growth to the high single digits.

Yeah sure. I’ll start I mean, I’ll let Scott to run you the details. I think I would, Jim, I would – I think it's best to look at this not as markets. We talked at our April session with you guys about the embedded growth process that we deal with so we look beyond markets in those specific application so for us it's a very generic world out there, but generic being that everything we do is specific to some unique trait and the ability we can have and it's independent of the market. So we don't look at these light markets and we don't – and we don't analyze our movements nor we put our teams in place, we don't do anything relative to markets, we really work at it as applications, differentiation and we do anything we lump together simple application to create programs that go into certain arenas. So it's – I like to answer your question but we really don't look at it even that way.

Thank you.

Sure.

Your next question comes from our Alex Yefremov with Nomura Instinet. Please go ahead.

Good morning. Thank you. Understanding that your POM portfolio is mostly differentiated if you look at the industry as a whole is POM operating at a high rate at this point?

Yeah. I mean the answer is yes, and we have a lot of differentiated products, we also have some more standard products as well but the whole industry is operating at a pretty high rate.

Understood. Thank you. On your guidance for 2019 is there any buyback or M&A assumption within that?

Yeah. What – Yeah, not really. If you look at where we are from the earnings point of view the buyback we're talking about is a pretty de minimis effect and so to imply that we have the ability to forecast things in the 10%, 20% kind of range and we don’t have that ability. So, no, not in there.

I understood that. Thank you.

Anita, let’s take one more question and it will be the last for the call.

The last question comes from Matthew Blair from Tudor Pickering Holt. Please go ahead.

Hey, good morning. Thanks for taking my question. The release mentioned that project wins and EM were up 58% year-over-year. Could you provide a breakout or maybe any sort of general commentary on how much of this growth is coming from existing customers and how much is coming from new customers and where do you see the most opportunity going forward?

Yeah that's right. I mean Q3 of this year versus Q3 of last year it is up those kind of percentages we did close 925 projects and that comes from a real mix. I'm not going to give you the exact numbers, but I think it's safe to say that both existing customers are comprehensive solutions portfolio is being applied to a bigger set of their needs and at the same time, we're also out there trying to translate those wins or those technologies to a new set of customers what really is both.

Great. And then in the retail chain we saw reports of a fair amount of planned and unplanned maintenance in Singapore and then geeing in Q3, but then obviously the results were really strong. So it’s curious if you felt like you left any opportunity on the table in Q3 and if so how much?

No, no we didn't. We really don't believe what up to any other type of boss. I mean we're back in every corner of the world to do what we can to make money.

Sounds good. Thanks.

Sure.

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

This conference has now concluded. Thank you for attending today’s presentation.