The company noted sales growth in nearly all end markets, as it continues to more than offset inflation to deliver record results. Sales increased 11% to
"We continue to execute very well against a backdrop of macroeconomic challenges. I'm pleased with our results for the quarter, which exceeded our initial estimates as we began the year," said
The company is providing its first quarter results in anticipation of discussions with investors, following the signing of an agreement with Royal DSM ("DSM") to purchase the
This webcast replaces the previously communicated earnings webcast date that was originally scheduled to be held on
In this press release, statements that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial condition, performance and/or sales. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: the ability and time required to consummate the acquisition of Dyneema; our ability to achieve the strategic and other objectives relating to the proposed acquisition of Dyneema; disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future; the effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory risks; the current and potential future impact of the COVID-19 pandemic on our business, results of operations, financial position or cash flows; changes in polymer consumption growth rates and laws and regulations regarding plastics in jurisdictions where we conduct business; fluctuations in raw material prices, quality and supply, and in energy prices and supply; production outages or material costs associated with scheduled or unscheduled maintenance programs; unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters; an inability to raise or sustain prices for products or services; information systems failures and cyberattacks; and other factors affecting our business beyond our control, including without limitation, changes in the general economy, changes in interest rates and changes in the rate of inflation. The above list of factors is not exhaustive.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any further disclosures we make on related subjects in our reports on Form 10-Q, 8-K and 10-K that we provide to the
The Company uses both GAAP (generally accepted accounting principles) and non-GAAP financial measures. The non-GAAP financial measures include: adjusted EPS and free cash flow.
The Company does not provide reconciliations of forward-looking non-GAAP financial measures, such as outlook for adjusted earnings per share, to the most comparable GAAP financial measures on a forward-looking basis because the Company is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, restructuring costs, environmental remediation costs, acquisition related costs, and other non-routine costs. Each of such adjustments has not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information.
Attachment 1 |
|||
|
|||
Summary of Condensed Consolidated Statements of Income (Unaudited) |
|||
(In millions, except per share data) |
|||
Three Months Ended |
|||
2022 |
2021 |
||
Sales |
$ 1,293.8 |
$ 1,162.3 |
|
Operating Income |
128.6 |
120.4 |
|
Net income attributable to |
84.2 |
79.3 |
|
Basic earnings per share attributable to |
$ 0.92 |
$ 0.87 |
|
Diluted earnings per share attributable to |
$ 0.91 |
$ 0.86 |
Senior management uses comparisons of adjusted net income attributable to
Three Months Ended |
Three Months Ended |
||||||
Reconciliation to Condensed Consolidated Statements of Income |
$ |
EPS |
$ |
EPS |
|||
Net income attributable to |
$ 84.2 |
$ 0.91 |
$ 79.3 |
$ 0.86 |
|||
Special items, after tax (Attachment 3) |
7.2 |
0.08 |
2.6 |
0.03 |
|||
Adjusted net income / EPS - excluding special items |
$ 91.4 |
$ 0.99 |
$ 81.9 |
$ 0.89 |
Attachment 2 |
|||
|
|||
Condensed Consolidated Statements of Income (Unaudited) |
|||
(In millions, except per share data) |
|||
Three Months Ended |
|||
2022 |
2021 |
||
Sales |
$ 1,293.8 |
$ 1,162.3 |
|
Cost of sales |
1,000.1 |
859.9 |
|
Gross margin |
293.7 |
302.4 |
|
Selling and administrative expense |
165.1 |
182.0 |
|
Operating income |
128.6 |
120.4 |
|
Interest expense, net |
(16.9) |
(19.3) |
|
Other (expense) income, net |
(0.6) |
1.5 |
|
Income before income taxes |
111.1 |
102.6 |
|
Income taxes |
(26.6) |
(22.9) |
|
Net income |
84.5 |
79.7 |
|
Net income attributable to noncontrolling interests |
(0.3) |
(0.4) |
|
Net income attributable to |
$ 84.2 |
$ 79.3 |
|
Earnings per share attributable to |
$ 0.92 |
$ 0.87 |
|
Earnings per share attributable to |
$ 0.91 |
$ 0.86 |
|
Cash dividends declared per share of common stock |
$ 0.2375 |
$ 0.2125 |
|
Weighted-average shares used to compute earnings per common share: |
|||
Basic |
91.5 |
91.3 |
|
Diluted |
92.3 |
92.2 |
Attachment 3 |
|||
|
|||
Summary of Special Items (Unaudited) |
|||
(In millions, except per share data) |
|||
Special items (1) |
Three Months Ended |
||
2022 |
2021 |
||
Cost of sales: |
|||
Restructuring costs, including accelerated depreciation and amortization |
$ (4.4) |
$ (1.8) |
|
Environmental remediation costs |
(2.0) |
(0.5) |
|
Reimbursement of previously incurred environmental costs |
0.6 |
4.5 |
|
Impact on cost of sales |
(5.8) |
2.2 |
|
Selling and administrative expense: |
|||
Restructuring, legal and other |
0.9 |
(1.3) |
|
Acquisition related costs |
(2.9) |
(3.3) |
|
Impact on selling and administrative expense |
(2.0) |
(4.6) |
|
Impact on operating income |
(7.8) |
(2.4) |
|
Other income, net |
0.1 |
— |
|
Impact on income before income taxes |
(7.7) |
(2.4) |
|
Income tax benefit on above special items |
2.0 |
0.9 |
|
Tax adjustments(2) |
(1.5) |
(1.1) |
|
Impact of special items on net income attributable to Avient Shareholders |
$ (7.2) |
$ (2.6) |
|
Diluted earnings per common share impact |
$ (0.08) |
$ (0.03) |
|
Weighted average shares used to compute adjusted earnings per share: |
|||
Diluted |
92.3 |
92.2 |
(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 actuarial 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, joint ventures and equity investments; 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 benefit/(expense) from one-time income tax items, the set-up or reversal of uncertain tax position reserves and deferred income tax valuation allowance adjustments. |
Attachment 4 |
|||
|
|||
Condensed Consolidated Balance Sheets |
|||
(In millions) |
|||
(Unaudited) |
|
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 562.6 |
$ 601.2 |
|
Accounts receivable, net |
757.9 |
642.3 |
|
Inventories, net |
475.4 |
461.1 |
|
Other current assets |
131.0 |
122.4 |
|
Total current assets |
1,926.9 |
1,827.0 |
|
Property, net |
661.9 |
676.1 |
|
|
1,283.4 |
1,286.4 |
|
Intangible assets, net |
904.1 |
925.2 |
|
Operating lease assets, net |
67.1 |
74.1 |
|
Other non-current assets |
200.3 |
208.4 |
|
Total assets |
$ 5,043.7 |
$ 4,997.2 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Short-term and current portion of long-term debt |
$ 607.5 |
$ 8.6 |
|
Accounts payable |
642.3 |
553.9 |
|
Current operating lease obligations |
21.7 |
24.2 |
|
Accrued expenses and other current liabilities |
284.8 |
353.9 |
|
Total current liabilities |
1,556.3 |
940.6 |
|
Non-current liabilities: |
|||
Long-term debt |
1,250.2 |
1,850.3 |
|
Pension and other post-retirement benefits |
98.5 |
100.0 |
|
Deferred income taxes |
99.4 |
100.6 |
|
Non-current operating lease obligations |
45.9 |
50.1 |
|
Other non-current liabilities |
164.1 |
165.1 |
|
Total non-current liabilities |
1,658.1 |
2,266.1 |
|
SHAREHOLDERS' EQUITY |
|||
|
1,813.2 |
1,774.7 |
|
Noncontrolling interest |
16.1 |
15.8 |
|
Total equity |
1,829.3 |
1,790.5 |
|
Total liabilities and equity |
$ 5,043.7 |
$ 4,997.2 |
Attachment 5 |
|||
|
|||
Condensed Consolidated Statements of Cash Flows (Unaudited) |
|||
(In millions) |
|||
Three Months Ended |
|||
2022 |
2021 |
||
Operating Activities |
|||
Net income |
$ 84.5 |
$ 79.7 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
Depreciation and amortization |
35.7 |
36.6 |
|
Accelerated depreciation and amortization |
2.1 |
0.5 |
|
Share-based compensation expense |
3.2 |
2.7 |
|
Changes in assets and liabilities, net of the effect of acquisitions: |
|||
Increase in accounts receivable |
(118.8) |
(137.6) |
|
Increase in inventories |
(15.1) |
(35.1) |
|
Increase in accounts payable |
90.5 |
67.3 |
|
Decrease in pension and other post-retirement benefits |
(4.0) |
(7.1) |
|
Decrease in accrued expenses and other assets and liabilities, net |
(59.2) |
(3.4) |
|
Net cash provided by operating activities |
18.9 |
3.6 |
|
Investing activities |
|||
Capital expenditures |
(13.3) |
(16.5) |
|
Other investing activities |
— |
(2.0) |
|
Net cash used by investing activities |
(13.3) |
(18.5) |
|
Financing activities |
|||
Purchase of common shares for treasury |
(15.8) |
(4.2) |
|
Cash dividends paid |
(21.7) |
(19.5) |
|
Repayment of long-term debt |
(2.4) |
(2.3) |
|
Payments of withholding tax on share awards |
(3.9) |
(3.1) |
|
Net cash used by financing activities |
(43.8) |
(29.1) |
|
Effect of exchange rate changes on cash |
(0.4) |
(11.0) |
|
Decrease in cash and cash equivalents |
(38.6) |
(55.0) |
|
Cash and cash equivalents at beginning of year |
601.2 |
649.5 |
|
Cash and cash equivalents at end of period |
$ 562.6 |
$ 594.5 |
Attachment 6 |
|||
|
|||
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 and eliminations. |
Three Months Ended |
|||
2022 |
2021 |
||
Sales: |
|||
Color, Additives and Inks |
$ 649.5 |
$ 609.3 |
|
Specialty Engineered Materials |
244.7 |
216.5 |
|
Distribution |
432.9 |
362.7 |
|
Corporate and eliminations |
(33.3) |
(26.2) |
|
Sales |
$ 1,293.8 |
$ 1,162.3 |
|
Gross margin: |
|||
Color, Additives and Inks |
$ 192.1 |
$ 197.5 |
|
Specialty Engineered Materials |
69.8 |
64.7 |
|
Distribution |
39.3 |
39.3 |
|
Corporate and eliminations |
(7.5) |
0.9 |
|
Gross margin |
$ 293.7 |
$ 302.4 |
|
Selling and administrative expense: |
|||
Color, Additives and Inks |
$ 97.6 |
$ 108.7 |
|
Specialty Engineered Materials |
30.1 |
30.5 |
|
Distribution |
15.1 |
15.3 |
|
Corporate and eliminations |
22.3 |
27.5 |
|
Selling and administrative expense |
$ 165.1 |
$ 182.0 |
|
Operating income: |
|||
Color, Additives and Inks |
$ 94.5 |
$ 88.8 |
|
Specialty Engineered Materials |
39.7 |
34.2 |
|
Distribution |
24.2 |
24.0 |
|
Corporate and eliminations |
(29.8) |
(26.6) |
|
Operating income |
$ 128.6 |
$ 120.4 |
|
Earnings before interest, taxes, depreciation and amortization (EBITDA): |
|||
Color, Additives and Inks |
$ 120.5 |
$ 116.2 |
|
Specialty Engineered Materials |
47.5 |
42.0 |
|
Distribution |
24.4 |
24.2 |
|
Corporate and eliminations |
(26.0) |
(24.9) |
|
Other income, net |
(0.6) |
1.5 |
|
EBITDA |
$ 165.8 |
$ 159.0 |
Attachment 7 |
|||
|
|||
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 |
|||
Three Months Ended |
|||
Reconciliation to Consolidated Statements of Income |
2022 |
2021 |
|
Sales |
$ 1,293.8 |
$ 1,162.3 |
|
Gross margin - GAAP |
293.7 |
302.4 |
|
Special items in gross margin (Attachment 3) |
5.8 |
(2.2) |
|
Adjusted gross margin |
$ 299.5 |
$ 300.2 |
|
Adjusted gross margin as a percent of sales |
23.2% |
25.8% |
|
Operating income - GAAP |
128.6 |
120.4 |
|
Special items in operating income (Attachment 3) |
7.8 |
2.4 |
|
Adjusted operating income |
$ 136.4 |
$ 122.8 |
|
Adjusted operating income as a percent of sales |
10.5% |
10.6% |
The table below reconciles pre-special income tax expense and the pre-special effective tax rate to their most comparable US GAAP figures.
Three Months Ended |
|||||||||||
2022 |
2021 |
||||||||||
GAAP Results |
Special Items |
Adjusted Results |
GAAP Results |
Special Items |
Adjusted Results |
||||||
Income from before income taxes |
$ 111.1 |
$ 7.7 |
|
$ 102.6 |
$ 2.4 |
|
|||||
Income tax expense - GAAP |
(26.6) |
— |
(26.6) |
(22.9) |
— |
(22.9) |
|||||
Income tax impact of special items (Attachment 3) |
— |
(2.0) |
(2.0) |
— |
(0.9) |
(0.9) |
|||||
Tax adjustments (Attachment 3) |
— |
1.5 |
1.5 |
— |
1.1 |
1.1 |
|||||
Income tax (expense) benefit |
|
$ (0.5) |
$ (27.1) |
|
$ 0.2 |
$ (22.7) |
|||||
Effective Tax Rate(1) |
23.9% |
22.8% |
22.3% |
21.6% |
|||||||
(1) Rates may not recalculate from figures presented herein due to rounding |
Reconciliation of EBITDA by Segment |
Three Months Ended |
||
2022 |
2021 |
||
Operating income: |
|||
Color, Additives and Inks |
$ 94.5 |
$ 88.8 |
|
Specialty Engineered Materials |
39.7 |
34.2 |
|
Distribution |
24.2 |
24.0 |
|
Corporate and eliminations |
(29.8) |
(26.6) |
|
Operating income |
$ 128.6 |
$ 120.4 |
|
Items below OI in Corporate: |
|||
Other income, net |
$ (0.6) |
$ 1.5 |
|
Depreciation & amortization: |
|||
Color, Additives and Inks |
$ 26.0 |
$ 27.4 |
|
Specialty Engineered Materials |
7.8 |
7.8 |
|
Distribution |
0.2 |
0.2 |
|
Corporate and eliminations |
3.8 |
1.7 |
|
Depreciation & Amortization |
$ 37.8 |
$ 37.1 |
|
EBITDA: |
|||
Color, Additives and Inks |
$ 120.5 |
$ 116.2 |
|
Specialty Engineered Materials |
47.5 |
42.0 |
|
Distribution |
24.4 |
24.2 |
|
Corporate and eliminations |
(26.0) |
(24.9) |
|
Other income, net |
(0.6) |
1.5 |
|
EBITDA |
$ 165.8 |
$ 159.0 |
|
EBITDA as a % of Sales: |
|||
Color, Additives and Inks |
18.6 % |
19.1 % |
|
Specialty Engineered Materials |
19.4 % |
19.4 % |
|
Distribution |
5.6 % |
6.7 % |
Three Months Ended |
|||
Reconciliation to EBITDA and Adjusted EBITDA: |
2022 |
2021 |
|
Net income from continuing operations – GAAP |
$ 84.5 |
$ 79.7 |
|
Income tax expense |
26.6 |
22.9 |
|
Interest expense |
16.9 |
19.3 |
|
Depreciation and amortization |
37.8 |
37.1 |
|
EBITDA |
$ 165.8 |
$ 159.0 |
|
Special items, before tax |
7.7 |
2.4 |
|
Depreciation and amortization included in special items |
(2.1) |
(0.5) |
|
Adjusted EBITDA |
$ 171.4 |
$ 160.9 |
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SOURCE
Investor Relations Contact: Giuseppe (Joe) Di Salvo, Vice President, Treasurer and Investor Relations, Avient Corporation, +1 440-930-1921, giuseppe.disalvo@avient.com; Media Contact: Kyle G. Rose, Vice President, Corporate Communications, Avient Corporation, +1 440-930-3162, kyle.rose@avient.com