Avient Announces Record First Quarter 2021 Results; Increases Full Year Guidance

Attachment 1

Avient Corporation

Summary of Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended
March 31,

2021

2020

Sales

$

1,162.3

$

711.5

Operating Income

120.4

52.8

Net income from continuing operations attributable to Avient shareholders

79.3

33.1

Basic earnings per share from continuing operations attributable to Avient shareholders

$

0.87

$

0.38

Diluted earnings per share from continuing operations attributable to Avient shareholders

$

0.86

$

0.38

Three Months Ended
March 31, 2021

Three Months Ended
March 31, 2020

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

79.3

$

0.86

$

33.1

$

0.38

Special items, after tax (Attachment 3)

2.6

0.03

8.6

0.10

Adjusted net income / EPS - excluding special items

$

81.9

$

0.89

$

41.7

$

0.48

Attachment 2

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended

March 31,

2021

2020

Sales

$

1,162.3

$

711.5

Cost of sales

859.9

540.0

Gross margin

302.4

171.5

Selling and administrative expense

182.0

118.7

Operating income

120.4

52.8

Interest expense, net

(19.3)

(9.4)

Other income, net

1.5

1.6

Income from continuing operations before income taxes

102.6

45.0

Income taxes

(22.9)

(11.9)

Net income from continuing operations

79.7

33.1

Loss from discontinued operations, net of income taxes

—

(0.3)

Net income

79.7

32.8

Net income attributable to noncontrolling interests

(0.4)

—

Net income attributable to Avient common shareholders

$

79.3

$

32.8

Earnings per share attributable to Avient common shareholders - Basic:

Continuing operations

$

0.87

$

0.38

Discontinued operations

—

—

Total

$

0.87

$

0.38

Earnings per share attributable to Avient common shareholders - Diluted:

Continuing operations

$

0.86

$

0.38

Discontinued operations

—

—

Total

$

0.86

$

0.38

Cash dividends declared per share of common stock

$

0.2125

$

0.2025

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

Basic

91.3

86.3

Diluted

92.2

86.7

Attachment 3

Avient Corporation

Summary of Special Items (Unaudited)

(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended

 March 31,

2021

2020

Cost of sales:

Restructuring costs, including accelerated depreciation and amortization

$

(1.8)

$

—

Environmental remediation costs

(0.5)

(0.4)

Reimbursement of previously incurred environmental costs

4.5

0.2

Impact on cost of sales

2.2

(0.2)

Selling and administrative expense:

Restructuring, legal and other

(1.3)

(1.8)

Acquisition earn-out adjustments

—

(1.0)

Acquisition related costs

(3.3)

(6.7)

Impact on selling and administrative expense

(4.6)

(9.5)

Impact on operating income

(2.4)

(9.7)

Other income, net

—

0.1

Impact on income from continuing operations before income taxes

(2.4)

(9.6)

Income tax benefit on above special items

0.9

2.0

Tax adjustments⁽²⁾

(1.1)

(1.0)

Impact of special items on net income from continuing operations
attributable to Avient Shareholders

$

(2.6)

$

(8.6)

Diluted earnings per common share impact

$

(0.03)

$

(0.10)

Weighted average shares used to compute adjusted earnings per share:

Diluted

92.2

86.7

⁽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

Avient Corporation

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited) March 31,
2021

December 31,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

594.5

$

649.5

Accounts receivable, net

642.2

516.6

Inventories, net

357.0

327.5

Other current assets

122.7

108.5

Total current assets

1,716.4

1,602.1

Property, net

675.5

694.9

Goodwill

1,281.9

1,308.1

Intangible assets, net

973.3

1,008.5

Operating lease assets, net

80.9

80.9

Other non-current assets

181.4

176.0

Total assets

$

4,909.4

$

4,870.5

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$

18.8

$

18.6

Accounts payable

529.6

471.7

Current operating lease obligations

24.3

25.1

Accrued expenses and other current liabilities

290.9

285.6

Total current liabilities

863.6

801.0

Non-current liabilities:

Long-term debt

1,852.7

1,854.0

Pension and other post-retirement benefits

111.3

115.0

Non-current operating lease obligations

56.8

56.0

Other non-current liabilities

303.0

332.8

Total non-current liabilities

2,323.8

2,357.8

SHAREHOLDERS' EQUITY

Avient shareholders' equity

1,707.0

1,697.1

Noncontrolling interest

15.0

14.6

Total equity

1,722.0

1,711.7

Total liabilities and equity

$

4,909.4

$

4,870.5

Attachment 5

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Three Months Ended

 March 31,

2021

2020

Operating Activities

Net income

$

79.7

$

32.8

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

Depreciation and amortization

36.6

19.9

Accelerated depreciation and amortization

0.5

—

Share-based compensation expense

2.7

2.1

Changes in assets and liabilities, net of the effect of acquisitions:

Increase in accounts receivable

(137.6)

(56.9)

Increase in inventories

(35.1)

(13.0)

Increase in accounts payable

67.3

44.6

Decrease in pension and other post-retirement benefits

(7.1)

(3.2)

Increase in post-acquisition earnout liabilities

—

1.0

Decrease in accrued expenses and other assets and liabilities, net

(3.4)

(19.1)

Payment of post-acquisition date earnout liability

—

(21.0)

Net cash provided (used) by operating activities

3.6

(12.8)

Investing activities

Capital expenditures

(16.5)

(11.1)

Net proceeds from divestiture

—

7.1

Net proceeds (used) provided by other assets

(2.0)

5.2

Net cash (used) provided by investing activities

(18.5)

1.2

Financing activities

Purchase of common shares for treasury

(4.2)

(13.6)

Cash dividends paid

(19.5)

(15.6)

Repayment of long-term debt

(2.3)

(2.0)

Payments of withholding tax on share awards

(3.1)

(1.3)

Equity offering proceeds, net of underwriting discount and issuance costs

—

496.3

Payment of acquisition date earnout liability

—

(32.9)

Net cash (used) provided by financing activities

(29.1)

430.9

Effect of exchange rate changes on cash

(11.0)

(3.8)

(Decrease) increase in cash and cash equivalents

(55.0)

415.5

Cash and cash equivalents at beginning of year

649.5

864.7

Cash and cash equivalents at end of period

$

594.5

$

1,280.2

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 and eliminations.

Three Months Ended

March 31,

2021

2020

Sales:

   Color, Additives and Inks

$

609.3

$

256.5

   Specialty Engineered Materials

216.5

185.3

   Distribution

362.7

289.5

   Corporate and eliminations

(26.2)

(19.8)

      Sales

$

1,162.3

$

711.5

Gross margin:

   Color, Additives and Inks

$

197.5

$

89.4

   Specialty Engineered Materials

64.7

52.6

   Distribution

39.3

33.6

   Corporate and eliminations

0.9

(4.1)

      Gross margin

$

302.4

$

171.5

Selling and administrative expense:

   Color, Additives and Inks

$

108.7

$

48.9

   Specialty Engineered Materials

30.5

30.3

   Distribution

15.3

14.2

   Corporate and eliminations

27.5

25.3

      Selling and administrative expense

$

182.0

$

118.7

Operating income:

   Color, Additives and Inks

$

88.8

$

40.5

   Specialty Engineered Materials

34.2

22.3

   Distribution

24.0

19.4

   Corporate and eliminations

(26.6)

(29.4)

      Operating income

$

120.4

$

52.8

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

   Color, Additives and Inks

$

116.2

$

51.4

   Specialty Engineered Materials

42.0

29.8

   Distribution

24.2

19.5

   Corporate and eliminations

(24.9)

(28.0)

Other income, net

1.5

1.6

      EBITDA

$

159.0

$

74.3

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 annual and long-term employee 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

March 31,

Reconciliation to Consolidated Statements of Income

2021

2020

Sales

$

1,162.3

$

711.5

Gross margin - GAAP

302.4

171.5

Special items in gross margin (Attachment 3)

(2.2)

0.2

Adjusted Gross margin

$

300.2

$

171.7

Adjusted Gross margin as a percent of sales

25.8

%

24.1

%

Operating income - GAAP

120.4

52.8

Special items in operating income (Attachment 3)

2.4

9.7

Adjusted Operating income

$

122.8

$

62.5

Adjusted Operating income as a percent of sales

10.6

%

8.8

%

Three Months Ended

March 31,

2021

2020

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special I
tems

Adjusted
Results

Income from continuing operations before income taxes

$

102.6

$

2.4

$

105.0

$

45.0

$

9.6

$

54.6

Income tax expense - GAAP

(22.9)

—

(22.9)

(11.9)

—

(11.9)

Income tax impact of special items (Attachment 3)

—

(0.9)

(0.9)

—

(2.0)

(2.0)

Tax adjustments (Attachment 3)

—

1.1

1.1

—

1.0

1.0

Income tax (expense) benefit

$

(22.9)

$

0.2

$

(22.7)

$

(11.9)

$

(1.0)

$

(12.9)

Effective Tax Rate⁽¹⁾

22.3

%

21.6

%

26.5

%

23.7

%

⁽¹⁾ Rates may not recalculate from figures presented herein due to rounding

Reconciliation of Pro Forma Adjusted Earnings per Share:

Three Months Ended 
March 31, 2020

Net income from continuing operations attributable to Avient shareholders

$

33.1

Special items, after tax (Attachment 3)

8.6

Adjusted net income from continuing operations excluding special items

41.7

Clariant MB pro forma adjustments to net income from continuing operations⁽²⁾

7.8

Pro forma adjusted net income from continuing operations attributable to Avient shareholders

$

49.5

Weighted average diluted shares

86.7

Pro forma impact to diluted shares from January 2020 equity offering

6.1

Pro forma weighted average diluted shares

92.8

Adjusted EPS - excluding special items pro forma for Clariant MB acquisition

$

0.53

Year Ended

December 31, 2020

Reconciliation of Pro Forma Adjusted
Earnings per Share:

Avient

Special
Items

Adjusted
Avient

Clariant MB

Pro Forma
Adjustments⁽²⁾

Pro Forma
Adjusted
Avient

Sales

$

3,242.1

$

—

$

3,242.1

$

540.4

$

3,782.5

Operating income

$

189.3

$

73.7

$

263.0

$

45.0

$

308.0

Interest expense, net

(74.6)

10.1

(64.5)

(18.1)

(82.6)

Other income, net

24.3

(17.6)

6.7

—

6.7

Income taxes

(5.2)

(41.4)

(46.6)

(6.2)

(52.8)

Net income attributable to noncontrolling
interests

(1.8)

—

(1.8)

—

(1.8)

Net income from continuing operations
attributable to Avient shareholders

$

132.0

$

24.8

$

156.8

$

20.7

$

177.5

Weighted average diluted shares

90.6

Impact to diluted shares from January 2020 equity offering

1.5

Pro forma weighted average diluted shares

92.1

Pro forma adjusted EPS

$

1.93

⁽²⁾

Pro forma adjustments for the periods prior to the acquisition date (July 1, 2020) and to give effects to the financing for the acquisition

Year Ended

December 31, 2019

Reconciliation of Pro Forma Adjusted
Earnings per Share:

Avient

Special
Items

Adjusted
Avient

Clariant MB

Pro Forma
Adjustments⁽³⁾

Pro Forma
Adjusted
Avient

Sales

$

2,862.7

$

—

$

2,862.7

$

1,118.6

$

3,981.3

Operating income

$

156.8

$

71.7

$

228.5

$

72.9

$

301.4

Interest expense, net

(59.5)

—

(59.5)

(33.4)

(92.9)

Other income, net

12.1

(10.0)

2.1

—

2.1

Income taxes

(33.7)

(5.9)

(39.6)

(9.1)

(48.7)

Net income attributable to noncontrolling
interests

(0.2)

—

(0.2)

—

(0.2)

Net income from continuing operations
attributable to Avient shareholders

$

75.5

$

55.8

$

131.3

$

30.4

$

161.7

Weighted average diluted shares

77.7

Impact to diluted shares from January 2020 equity offering

15.3

Pro forma weighted average diluted shares

93.0

Pro forma adjusted EPS

$

1.74

⁽³⁾

Pro forma adjustments for the periods prior to the acquisition date (July 1, 2020) and to give effects to the financing for the acquisition

Reconciliation of EBITDA by Segment

Three Months Ended

March 31,

Year Ended
December 31,

2021

2020

2020

2019

2018

Operating income:

   Color, Additives and Inks

$

88.8

$

40.5

$

180.8

$

147.4

$

158.5

   Specialty Engineered Materials

34.2

22.3

94.4

83.7

72.3

   Distribution

24.0

19.4

69.5

75.4

71.5

   Corporate and eliminations

(26.6)

(29.4)

(155.4)

(149.7)

(123.7)

      Operating income

$

120.4

$

52.8

$

189.3

$

156.8

$

178.6

Items below OI in Corporate:

Other income, net

$

1.5

$

1.6

$

24.3

$

12.1

$

(12.9)

Depreciation & amortization:

Color, Additives and Inks

$

27.4

$

10.9

$

75.1

$

42.7

$

44.3

Specialty Engineered Materials

7.8

7.5

30.0

29.5

23.2

Distribution

0.2

0.1

0.7

0.5

0.7

Corporate and eliminations

1.7

1.4

9.2

5.4

4.4

Depreciation & Amortization

$

37.1

$

19.9

$

115.0

$

78.1

$

72.6

EBITDA

   Color, Additives and Inks

$

116.2

$

51.4

$

255.9

$

190.1

$

202.8

   Specialty Engineered Materials

42.0

29.8

124.4

113.2

95.5

   Distribution

24.2

19.5

70.2

75.9

72.2

   Corporate and eliminations

(24.9)

(28.0)

(146.2)

(144.3)

(119.3)

      EBITDA

$

159.0

$

74.3

$

328.6

$

247.0

$

238.3

EBITDA as a % of Sales:

Color, Additives and Inks

19.1

%

20.0

%

17.0

%

18.9

%

19.4

%

Specialty Engineered Materials

19.4

%

16.1

%

17.6

%

15.2

%

14.8

%

Distribution

6.7

%

6.7

%

6.3

%

6.4

%

5.7

%

Reconciliation of Pro Forma EBITDA - Color,
Additives and Inks

Three Months Ended
March 31,

Year Ended

December 31,

2020

2020

2019

2018

Sales:

   Color, Additives and Inks

$

256.5

$

1,502.9

$

1,003.8

$

1,046.5

   Clariant MB pro forma adjustments⁽⁴⁾

279.4

540.4

1,118.6

1,209.8

      Pro forma sales

$

535.9

$

2,043.3

$

2,122.4

$

2,256.3

Operating income:

   Color, Additives and Inks

$

40.5

$

180.8

$

147.4

$

158.5

   Clariant MB pro forma adjustments⁽⁴⁾

23.0

45.0

72.9

80.3

      Pro forma operating income

$

63.5

$

225.8

$

220.3

$

238.8

Depreciation & amortization:

Color, Additives and Inks

$

10.9

$

75.1

$

42.7

$

44.3

Clariant MB pro forma adjustments⁽⁴⁾

15.1

30.1

60.3

61.2

Pro forma depreciation & amortization

$

26.0

$

105.2

$

103.0

$

105.5

Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA):

   Color, Additives and Inks

$

51.4

$

255.9

$

190.1

$

202.8

   Clariant MB pro forma adjustments⁽⁴⁾

38.1

75.1

133.2

141.5

      Pro forma EBITDA

$

89.5

$

331.0

$

323.3

$

344.3

Pro forma EBITDA as a % of Sales

16.7

%

16.2

%

15.2

%

15.3

%

Three Months Ended
March 31,

Year Ended

December 31,

Reconciliation to Adjusted EBITDA:

2021

2020

2020

2019

2018

Net income from continuing operations – GAAP

$

79.7

$

33.1

$

133.8

$

75.7

$

87.4

Income tax expense

22.9

11.9

5.2

33.7

14.4

Interest expense

19.3

9.4

74.6

59.5

62.8

Debt extinguishment cost

—

—

1.1

Depreciation and amortization from continuing operations

37.1

19.9

115.0

78.1

72.6

EBITDA

$

159.0

$

74.3

$

328.6

$

247.0

$

238.3

Special items, before tax

2.4

9.6

66.2

61.7

59.5

Interest expense included in special items

—

—

(10.1)

—

—

Accelerated depreciation included in special items

(0.5)

—

(3.2)

—

(3.0)

Adjusted EBITDA 

$

160.9

$

83.9

$

381.6

$

308.7

$

294.8

Reconciliation of Pro Forma Sales:

Three Months Ended
March 31, 2020

Sales

$

711.5

Clariant MB pro forma adjustment to sales⁽⁴⁾

279.4

Pro forma sales

$

990.9

⁽⁴⁾

Pro forma adjustments for the periods prior to the acquisition date (July 1, 2020)