Avient Announces Third Quarter 2024 Results

Attachment 1

Avient Corporation

Summary of Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

Sales

$       815.2

$       753.7

$    2,493.9

$    2,423.8

Operating income

77.2

34.3

243.7

153.7

Net income from continuing operations attributable to Avient
shareholders

38.2

5.1

121.2

48.0

Diluted earnings per share from continuing operations attributable to
Avient shareholders

$         0.41

$         0.06

$         1.32

$         0.52

Senior management uses comparisons of adjusted net income from continuing operations attributable to Avient shareholders and diluted adjusted earnings per share (EPS) from continuing operations attributable to Avient shareholders, excluding special items, to assess performance and facilitate comparability of results. Further, as a result of Avient's portfolio shift to a pure play specialty formulator, it has completed several acquisitions and divestitures which have resulted in a significant amount of intangible asset amortization. Management excludes intangible asset amortization from adjusted EPS as it believes excluding acquired intangible asset amortization is a useful measure of current period earnings per share. Senior management believes these measures are useful to investors because they allow for comparison to Avient's performance in prior periods without the effect of items that, by their nature, tend to obscure Avient's operating results due to the potential variability across periods based on timing, frequency and magnitude. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or solely as alternatives to, financial measures prepared in accordance with GAAP. Below is a reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. See Attachment 3 for a definition and summary of special items.

Three Months Ended September 30,

2024

2023

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$         38.2

$         0.41

$           5.1

$         0.06

Special items, after-tax (Attachment 3)

6.6

0.07

32.0

0.35

Amortization expense, after-tax

15.0

0.16

15.2

0.16

Adjusted net income / EPS

$         59.8

$         0.65

$         52.3

$         0.57

⁽¹⁾

Per share amounts may not recalculate from figures presented herein due to rounding

Nine Months Ended September 30,

2024

2023

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$       121.2

$         1.32

$         48.0

$         0.52

Special items, after-tax (Attachment 3)

33.9

0.37

73.9

0.81

Amortization expense, after-tax

44.7

0.49

46.5

0.51

Adjusted net income / EPS

$       199.8

$         2.17

$       168.4

$         1.84

⁽¹⁾

Per share amounts may not recalculate from figures presented herein due to rounding

Attachment 2

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024

2023

2024

2023

Sales

$        815.2

$        753.7

$    2,493.9

$    2,423.8

Cost of sales

553.8

558.4

1,696.7

1,740.2

Gross margin

261.4

195.3

797.2

683.6

Selling and administrative expense

184.2

161.0

553.5

529.9

Operating income

77.2

34.3

243.7

153.7

Interest expense, net

(26.9)

(30.3)

(80.1)

(88.5)

Other (expense) income, net

(0.3)

1.0

(2.1)

1.5

Income from continuing operations before income taxes

50.0

5.0

161.5

66.7

Income tax (expense) benefit

(11.3)

0.1

(39.3)

(18.0)

Net income from continuing operations

38.7

5.1

122.2

48.7

Loss from discontinued operations, net of income taxes

—

—

—

(0.9)

Net income

$          38.7

$            5.1

$        122.2

$          47.8

Net income attributable to noncontrolling interests

(0.5)

—

(1.0)

(0.7)

Net income attributable to Avient common shareholders

$          38.2

$            5.1

$        121.2

$          47.1

Earnings (loss) per share attributable to Avient common shareholders - Basic:

Continuing operations

$          0.42

$          0.06

$          1.33

$          0.53

Discontinued operations

—

—

—

(0.01)

Total

$          0.42

$          0.06

$          1.33

$          0.52

Earnings (loss) per share attributable to Avient common shareholders - Diluted:

Continuing operations

$          0.41

$          0.06

$          1.32

$          0.52

Discontinued operations

—

—

—

(0.01)

Total

$          0.41

$          0.06

$          1.32

$          0.51

Cash dividends declared per share of common stock

$      0.2575

$      0.2475

$      0.7725

$      0.7425

Weighted-average shares used to compute earnings per common share:

Basic

91.3

91.1

91.3

91.1

Diluted

92.3

91.9

92.0

91.8

Attachment 3

Avient Corporation

Summary of Special Items (Unaudited)

(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended
September 30,

Nine Months Ended
September 30,

2024

2023

2024

2023

Cost of sales:

Restructuring costs, including accelerated depreciation

$           1.8

$         (2.1)

$           5.6

$         (9.9)

Environmental remediation costs

(2.4)

(38.1)

(28.2)

(52.5)

Impact on cost of sales

(0.6)

(40.2)

(22.6)

(62.4)

Selling and administrative expense:

Restructuring and employee separation costs

(3.1)

(2.0)

(6.6)

(13.8)

Legal and other

(4.3)

1.7

(10.1)

(9.1)

Acquisition related costs

(0.4)

(0.5)

(2.5)

(4.6)

Impact on selling and administrative expense

(7.8)

(0.8)

(19.2)

(27.5)

Impact on operating income

(8.4)

(41.0)

(41.8)

(89.9)

Interest expense, net - financing costs

(1.3)

(2.2)

(2.3)

(2.2)

Other income (loss)

—

—

0.1

(0.1)

Impact on income from continuing operations before income taxes

(9.7)

(43.2)

(44.0)

(92.2)

Income tax benefit on special items

3.5

10.8

11.9

23.2

Tax adjustments⁽²⁾

(0.4)

0.4

(1.8)

(4.9)

Impact of special items on net income from continuing operations

$         (6.6)

$       (32.0)

$       (33.9)

$       (73.9)

Diluted earnings per common share impact

$       (0.07)

$       (0.35)

$       (0.37)

$       (0.81)

Weighted average shares used to compute adjusted earnings per share:

Diluted

92.3

91.9

92.0

91.8

⁽¹⁾

Special items include charges related to specific strategic initiatives or financial restructuring such as: consolidation of operations; debt extinguishment costs; costs incurred directly in relation to acquisitions or divestitures; employee separation costs resulting from personnel reduction programs, plant realignment costs, executive separation agreements; asset impairments; settlement gains or losses and mark-to-market adjustments associated with gains and losses on pension and other post-retirement benefit plans; environmental remediation costs, fines, penalties and related insurance recoveries related to facilities no longer owned or closed in prior years; gains and losses on the divestiture of operating businesses, gains and losses on facility or property sales or disposals; results of litigation, fines or penalties, where such litigation (or action relating to the fines or penalties) arose prior to the commencement of the performance period; one-time, non-recurring items; and the effect of changes in accounting principles or other such laws or provisions affecting reported results.

⁽²⁾

Tax adjustments include the net tax impact from non-recurring income tax items and certain adjustments to uncertain tax position reserves and valuation allowances.

Attachment 4

Avient Corporation

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

September 30,
2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

$                         505.7

$                         545.8

Accounts receivable, net

465.1

399.9

Inventories, net

377.8

347.0

Other current assets

108.8

114.9

Total current assets

1,457.4

1,407.6

Property, net

973.5

1,028.9

Goodwill

1,716.8

1,719.3

Intangible assets, net

1,542.5

1,590.8

Deferred income taxes

133.1

92.3

Other non-current assets

224.0

129.6

Total assets

$                     6,047.3

$                     5,968.5

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$                             7.8

$                             9.5

Accounts payable

425.9

432.3

Accrued expenses and other current liabilities

460.8

331.8

Total current liabilities

894.5

773.6

Non-current liabilities:

Long-term debt

2,059.9

2,070.5

Pension and other post-retirement benefits

63.7

67.2

Deferred income taxes

289.1

281.6

Other non-current liabilities

359.9

437.6

Total non-current liabilities

2,772.6

2,856.9

SHAREHOLDERS' EQUITY

Avient shareholders' equity

2,363.0

2,319.2

Noncontrolling interest

17.2

18.8

Total equity

2,380.2

2,338.0

Total liabilities and equity

$                      6,047.3

$                      5,968.5

Attachment 5

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Nine Months Ended

September 30,

2024

2023

Operating activities

Net income

$              122.2

$                47.8

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

133.1

142.6

Accelerated depreciation

1.2

1.9

Share-based compensation expense

12.5

9.7

Changes in assets and liabilities:

Increase in accounts receivable

(65.7)

(5.7)

(Increase) decrease in inventories

(30.2)

16.5

Decrease in accounts payable

(5.7)

(59.1)

Taxes paid on gain on sale of business

—

(104.1)

Accrued expenses and other assets and liabilities, net

(33.2)

(2.5)

Net cash provided by operating activities

134.2

47.1

Investing activities

Capital expenditures

(80.8)

(75.0)

Net proceeds from divestiture

—

7.3

Proceeds from plant closures

3.4

—

Other investing activities

(2.1)

2.3

Net cash used by investing activities

(79.5)

(65.4)

Financing activities

Proceeds from long-term borrowings

650.0

—

Payments on long-term borrowings

(659.1)

(103.8)

Cash dividends paid

(70.5)

(67.6)

Debt financing costs

(9.6)

(2.3)

Other financing activities

(4.6)

(2.3)

Net cash used by financing activities

(93.8)

(176.0)

Effect of exchange rate changes on cash

(1.0)

(7.2)

Decrease in cash and cash equivalents

(40.1)

(201.5)

Cash and cash equivalents at beginning of year

545.8

641.1

Cash and cash equivalents at end of period

$              505.7

$              439.6

Attachment 6

Avient Corporation

Business Segment Operations (Unaudited)

(In millions)

Operating income and earnings before interest, taxes, depreciation and amortization (EBITDA) at the segment level does not
include: special items as defined in Attachment 3; corporate general and administration costs that are not allocated to
segments; intersegment sales and profit eliminations; share-based compensation costs; and certain other items that are not
included in the measure of segment profit and loss that is reported to and reviewed by the chief operating decision maker.
These costs are included in Corporate.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024

2023

2024

2023

Sales:

   Color, Additives and Inks

$           521.5

$           486.5

$        1,578.8

$        1,548.0

   Specialty Engineered Materials

294.6

267.9

917.1

878.4

   Corporate

(0.9)

(0.7)

(2.0)

(2.6)

      Sales

$           815.2

$           753.7

$        2,493.9

$        2,423.8

Gross margin:

   Color, Additives and Inks

$           172.8

$           156.8

$           528.5

$           482.9

   Specialty Engineered Materials

89.0

78.3

290.7

263.7

   Corporate

(0.4)

(39.8)

(22.0)

(63.0)

      Gross margin

$           261.4

$           195.3

$           797.2

$           683.6

Selling and administrative expense:

   Color, Additives and Inks

$             97.3

$             92.3

$           292.1

$           284.8

   Specialty Engineered Materials

52.6

48.0

158.1

150.6

   Corporate

34.3

20.7

103.3

94.5

      Selling and administrative expense

$           184.2

$           161.0

$           553.5

$           529.9

Operating income:

   Color, Additives and Inks

$             75.5

$             64.5

$           236.4

$           198.1

   Specialty Engineered Materials

36.4

30.3

132.6

113.1

   Corporate

(34.7)

(60.5)

(125.3)

(157.5)

      Operating income

$             77.2

$             34.3

$           243.7

$           153.7

Depreciation & amortization:

Color, Additives and Inks

$             21.9

$             24.6

$             65.6

$             76.1

Specialty Engineered Materials

20.7

20.5

61.1

61.6

Corporate

2.5

1.3

7.6

6.8

  Depreciation & amortization

$             45.1

$             46.4

$           134.3

$           144.5

Earnings before interest, taxes, depreciation and
amortization (EBITDA):

   Color, Additives and Inks

$             97.4

$             89.1

$           302.0

$           274.2

   Specialty Engineered Materials

57.1

50.8

193.7

174.7

   Corporate

(32.2)

(59.2)

(117.7)

(150.7)

Other (expense) income, net

(0.3)

1.0

(2.1)

1.5

  EBITDA from continuing operations

$           122.0

$             81.7

$           375.9

$           299.7

Special items, before tax

9.7

43.2

44.0

92.2

Interest expense included in special items

(1.3)

(2.2)

(2.3)

(2.2)

Depreciation & amortization included in special items

(0.4)

—

(1.2)

(1.9)

  Adjusted EBITDA

$           130.0

$           122.7

$           416.4

$           387.8

Attachment 7

Avient Corporation

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(In millions, except per share data)

Senior management uses gross margin before special items and operating income before special items to assess performance and allocate resources
because senior management believes that these measures are useful in understanding current profitability levels and how it may serve as a basis for
future performance. In addition, operating income before the effect of special items is a component of Avient's annual incentive plans and is used in
debt covenant computations. Senior management believes these measures are useful to investors because they allow for comparison to Avient's
performance in prior periods without the effect of items that, by their nature, tend to obscure Avient's operating results due to the potential
variability across periods based on timing, frequency and magnitude. Non-GAAP financial measures have limitations as analytical tools and should
not be considered in isolation from, or solely as alternatives to, financial measures prepared in accordance with GAAP. Below is a reconciliation of
these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. See
Attachment 3 for a definition and summary of special items.

Three Months Ended

September 30,

Nine Months Ended

September 30,

Reconciliation to Consolidated Statements of Income

2024

2023

2024

2023

Sales

$          815.2

$          753.7

$       2,493.9

$       2,423.8

Gross margin - GAAP

261.4

195.3

797.2

683.6

Special items in gross margin (Attachment 3)

0.6

40.2

22.6

62.4

Adjusted gross margin

$          262.0

$          235.5

$          819.8

$          746.0

Adjusted gross margin as a percent of sales

32.1 %

31.2 %

32.9 %

30.8 %

Operating income - GAAP

77.2

34.3

243.7

153.7

Special items in operating income (Attachment 3)

8.4

41.0

41.8

89.9

Adjusted operating income

$            85.6

$            75.3

$          285.5

$          243.6

Adjusted operating income as a percent of sales

10.5 %

10.0 %

11.4 %

10.1 %

Three Months Ended
September 30,

Nine Months Ended

September 30,

Reconciliation to EBITDA and Adjusted EBITDA:

2024

2023

2024

2023

Net income from continuing operations – GAAP

$            38.7

$              5.1

$         122.2

$           48.7

Income tax expense (benefit)

11.3

(0.1)

39.3

18.0

Interest expense, net

26.9

30.3

80.1

88.5

Depreciation & amortization

45.1

46.4

134.3

144.5

EBITDA from continuing operations

$          122.0

$            81.7

$         375.9

$         299.7

Special items, before tax

9.7

43.2

44.0

92.2

Interest expense included in special items

(1.3)

(2.2)

(2.3)

(2.2)

Depreciation & amortization included in special items

(0.4)

—

(1.2)

(1.9)

Adjusted EBITDA 

$          130.0

$          122.7

$         416.4

$         387.8

Adjusted EBITDA as a percent of sales

15.9 %

16.3 %

16.7 %

16.0 %

Year Ended

December 31, 2023

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$                   75.8

$                   0.83

Special items, after-tax

79.3

0.86

Amortization expense, after-tax

61.5

0.67

Adjusted net income / EPS

$                 216.6

$                   2.36

⁽¹⁾

Per share amounts may not recalculate from figures presented herein due to rounding