Avient Announces Fourth Quarter and Full Year 2023 Results

Attachment 1

Avient Corporation

Summary of Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended

December 31,

Year Ended

December 31,

2023

2022

2023

2022

Sales

$       719.0

$       790.4

$    3,142.8

$    3,396.9

Operating income

43.1

0.4

196.8

243.3

Net income (loss) from continuing operations attributable to Avient
shareholders

27.8

(17.0)

75.8

82.8

Diluted earnings (loss) per share from continuing operations attributable
to Avient shareholders

$         0.30

$        (0.19)

$         0.83

$         0.90

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. 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 and Attachment 7 for a summary of pro forma adjustments associated with the APM Acquisition. 

Three Months Ended

December 31,

2023

2022

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income (loss) from continuing operations attributable to Avient shareholders

$         27.8

$         0.30

$       (17.0)

$       (0.19)

Special items, after tax (Attachment 3)

5.4

0.06

38.3

0.42

Amortization expense, after-tax

15.0

0.16

14.6

0.16

Adjusted net income / EPS

$         48.2

$         0.52

$         35.9

$         0.39

⁽¹⁾ Per share amounts may not recalculate from figures presented herein due to rounding

Year Ended

December 31,

2023

2022

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$         75.8

$         0.83

$         82.8

$         0.90

Special items, after tax (Attachment 3)

79.3

0.86

116.2

1.26

Amortization expense, after-tax

61.5

0.67

49.0

0.53

Adjusted net income / EPS

$       216.6

$         2.36

$       248.0

$         2.69

⁽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
December 31,

Year Ended

December 31,

2023

2022

2023

2022

Sales

$        719.0

$        790.4

$    3,142.8

$    3,396.9

Cost of sales

510.1

618.4

2,250.3

2,514.2

Gross margin

208.9

172.0

892.5

882.7

Selling and administrative expense

165.8

171.6

695.7

639.4

Operating income

43.1

0.4

196.8

243.3

Interest expense, net

(26.8)

(49.4)

(115.3)

(119.8)

Other income (expense), net

4.3

(28.4)

5.8

(59.7)

Income (loss) from continuing operations before income taxes

20.6

(77.4)

87.3

63.8

Income tax benefit (expense)

7.0

60.8

(11.0)

19.3

Net income (loss) from continuing operations

27.6

(16.6)

76.3

83.1

Income (loss) from discontinued operations, net of income taxes

0.8

561.5

(0.1)

620.3

Net income

28.4

544.9

76.2

703.4

Net loss (income) attributable to noncontrolling interests

0.2

(0.4)

(0.5)

(0.3)

Net income attributable to Avient common shareholders

$          28.6

$        544.5

$          75.7

$        703.1

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

Continuing operations

$          0.30

$        (0.19)

$          0.83

$          0.91

Discontinued operations

0.01

6.17

—

6.80

Total

$          0.31

$          5.98

$          0.83

$          7.71

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

Continuing operations

$          0.30

$        (0.19)

$          0.83

$          0.90

Discontinued operations

0.01

6.17

—

6.73

Total

$          0.31

$          5.98

$          0.83

$          7.63

Cash dividends declared per share of common stock

$     0.2575

$     0.2475

$     1.0000

$     0.9600

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

Basic

91.2

91.0

91.1

91.2

Diluted

91.9

91.0

91.8

92.2

Attachment 3

Avient Corporation

Summary of Special Items (Unaudited)

(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended
December 31,

Year Ended

December 31,

2023

2022

2023

2022

Cost of sales:

Restructuring costs, including accelerated depreciation

$         (2.0)

$      (21.3)

$      (11.9)

$      (31.1)

Environmental remediation costs

(17.2)

(0.4)

(69.7)

(24.2)

Reimbursement of previously incurred environmental costs

1.6

—

1.6

8.3

Acquisition related costs

—

(23.8)

—

(34.1)

Impact on cost of sales

(17.6)

(45.5)

(80.0)

(81.1)

Selling and administrative expense:

Restructuring and employee separation costs

(1.1)

(4.3)

(14.9)

(5.3)

Legal and other

(6.1)

(4.0)

(15.2)

(3.0)

Acquisition related costs

(1.3)

(6.1)

(5.9)

(19.3)

Impact on selling and administrative expense

(8.5)

(14.4)

(36.0)

(27.6)

Impact on operating income

(26.1)

(59.9)

(116.0)

(108.7)

Interest expense, net - financing costs

(0.1)

(16.0)

(2.3)

(26.0)

Mark-to-market on derivatives

—

—

—

(30.9)

   Pension and post retirement mark-to-market adjustment and other

3.8

(28.4)

3.7

(28.4)

Impact on other income (expense), net

3.8

(28.4)

3.7

(59.3)

Impact on income from continuing operations before income taxes

(22.4)

(104.3)

(114.6)

(194.0)

Income tax benefit on above special items

4.5

26.8

27.7

49.4

Tax adjustments⁽²⁾

12.5

39.2

7.6

28.4

Impact of special items on net income from continuing operations

$         (5.4)

$      (38.3)

$      (79.3)

$    (116.2)

Diluted earnings per common share impact

$      (0.06)

$      (0.42)

$      (0.86)

$      (1.26)

Weighted average shares used to compute adjusted earnings per share:

Diluted

91.9

91.7

91.8

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 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, adjustments to uncertain tax position reserves and the establishment, reversal or changes to valuation allowances.

Special items ⁽¹⁾

Three Months Ended

March 31,

2023

Cost of sales:

Restructuring costs, including accelerated depreciation

$                               (6.6)

Environmental remediation costs

(1.4)

Impact on cost of sales

(8.0)

Selling and administrative expense:

Restructuring and employee separation costs

(11.3)

Legal and other

(4.4)

Acquisition related costs

(3.4)

Impact on selling and administrative expense

(19.1)

Impact on operating income

(27.1)

Other loss

(0.2)

Impact on income from continuing operations before income taxes

(27.3)

Income tax expense on above special items

6.9

Tax adjustments⁽²⁾

(1.9)

Impact of special items on net income from continuing operations

$                             (22.3)

Diluted earnings per common share impact

$                             (0.24)

Weighted average shares used to compute adjusted earnings per share:

Diluted

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, adjustments to uncertain tax position reserves and the establishment, reversal or changes to valuation allowances.

Attachment 4

Avient Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

Year Ended

December 31,

2023

2022

ASSETS

Current assets:

Cash and cash equivalents

$                             545.8

$                          641.1

Accounts receivable, net

399.9

440.6

Inventories, net

347.0

372.7

Other current assets

114.9

115.3

Total current assets

1,407.6

1,569.7

Property, net

1,028.9

1,049.2

Goodwill

1,719.3

1,671.9

Intangible assets, net

1,590.8

1,597.6

Operating lease assets, net

65.3

60.4

Other non-current assets

156.6

136.2

Total assets

$                         5,968.5

$                       6,085.0

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$                                 9.5

$                               2.2

Accounts payable

432.3

454.4

Current operating lease obligations

16.6

17.0

Accrued expenses and other current liabilities

315.2

395.8

Total current liabilities

773.6

869.4

Non-current liabilities:

Long-term debt

2,070.5

2,176.7

Pension and other post-retirement benefits

67.2

67.2

Deferred income taxes

281.6

342.5

Non-current operating lease obligations

43.2

40.9

Other non-current liabilities

394.4

235.5

Total non-current liabilities

2,856.9

2,862.8

SHAREHOLDERS' EQUITY

Avient shareholders' equity

2,319.2

2,334.5

Noncontrolling interest

18.8

18.3

Total equity

2,338.0

2,352.8

Total liabilities and equity

$                         5,968.5

$                       6,085.0

Attachment 5

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Year Ended

December 31,

2023

2022

Operating activities

Net income

$                76.2

$              703.4

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

Gain on sale of business, net of tax expense

—

(550.1)

Depreciation and amortization

186.9

157.6

Accelerated depreciation

1.9

5.5

Amortization of inventory step-up

—

34.4

Deferred income tax (benefit) expense

(61.3)

0.5

Share-based compensation expense

13.2

13.2

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

Decrease in accounts receivable

38.6

32.6

Decrease in inventories

24.3

14.0

(Decrease) increase in accounts payable

(22.2)

10.7

(Decrease) increase in pension and other post-retirement benefits

(15.1)

7.1

Taxes paid on gain on sale of business

(104.1)

(2.8)

Accrued expenses and other assets and liabilities, net

63.2

(27.7)

Net cash provided by operating activities

201.6

398.4

Investing activities

Capital expenditures

(119.4)

(105.5)

Business acquisitions, net of cash acquired

—

(1,426.1)

Settlement of foreign exchange derivatives

—

93.3

Net proceeds from divestiture

7.3

928.2

Proceeds from plant closures

7.6

6.1

Other investing activities

10.3

—

Net cash used by investing activities

(94.2)

(504.0)

Financing activities

Debt offering proceeds

—

1,300.0

Purchase of common shares for treasury

—

(36.4)

Cash dividends paid

(90.2)

(86.8)

Repayment of long-term debt

(105.8)

(956.8)

Payments on withholding tax on share awards

(3.4)

(4.3)

Debt financing costs

(2.3)

(49.3)

Net cash (used) provided by financing activities

(201.7)

166.4

Effect of exchange rate changes on cash

(1.0)

(20.9)

(Decrease) increase in cash and cash equivalents

(95.3)

39.9

Cash and cash equivalents at beginning of year

641.1

601.2

Cash and cash equivalents at end of year

$              545.8

$              641.1

Attachment 6

Avient Corporation

Business Segment Operations (Unaudited)

(In millions)

Operating income 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 December 31,

Year Ended

December 31,

2023

2022

2023

2022

Sales:

   Color, Additives and Inks

$               459.4

$               490.8

$            2,007.4

$            2,355.0

   Specialty Engineered Materials

259.8

300.8

1,138.2

1,044.4

   Corporate

(0.2)

(1.2)

(2.8)

(2.5)

      Sales

$               719.0

$               790.4

$            3,142.8

$            3,396.9

Gross margin:

   Color, Additives and Inks

$               148.3

$               134.5

$               631.2

$               681.3

   Specialty Engineered Materials

78.1

82.4

341.8

283.7

   Corporate

(17.5)

(44.9)

(80.5)

(82.3)

      Gross margin

$               208.9

$               172.0

$               892.5

$               882.7

Selling and administrative expense:

   Color, Additives and Inks

$                 86.5

$                 90.2

$               371.3

$               380.3

   Specialty Engineered Materials

48.7

47.2

199.3

143.6

   Corporate

30.6

34.2

125.1

115.5

      Selling and administrative expense

$               165.8

$               171.6

$               695.7

$               639.4

Operating income:

   Color, Additives and Inks

$                 61.8

$                 44.3

$               259.9

$               301.0

   Specialty Engineered Materials

29.4

35.2

142.5

140.1

   Corporate

(48.1)

(79.1)

(205.6)

(197.8)

      Operating income

$                 43.1

$                    0.4

$               196.8

$               243.3

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'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
December 31,

Year Ended

December 31,

Reconciliation to Consolidated Statements of Income

2023

2022

2023

2022

Sales

$      719.0

$      790.4

$   3,142.8

$   3,396.9

Gross margin - GAAP

208.9

172.0

892.5

882.7

Special items in gross margin (Attachment 3)

17.6

45.5

80.0

81.1

Adjusted gross margin

$      226.5

$      217.5

$      972.5

$      963.8

Adjusted gross margin as a percent of sales

31.5 %

27.5 %

30.9 %

28.4 %

Operating income - GAAP

43.1

0.4

196.8

243.3

Special items in operating income (Attachment 3)

26.1

59.9

116.0

108.7

Adjusted operating income

$         69.2

$         60.3

$      312.8

$      352.0

Adjusted operating income as a percent of sales

9.6 %

7.6 %

10.0 %

10.4 %

The following pro forma adjustments are referenced by management to provide comparable business performance by incorporating the APM business in periods prior to the acquisition date (September 1, 2022). Financial information referenced here is provided to aid in reconciling back to the most comparable GAAP figures.

Three Months Ended

Year Ended

Reconciliation of Pro Forma Adjusted Earnings per Share

December 31, 2022

Net (loss) income from continuing operations attributable to Avient shareholders

$                            (17.0)

$                          82.8

Special items, after tax (Attachment 3)

38.3

116.2

Amortization expense, after-tax (Attachment 1)

14.6

49.0

Adjusted net income from continuing operations excluding special items

35.9

248.0

APM pro forma adjustments to net income from continuing operations*

2.5

13.6

APM amortization expense, after tax*

—

19.1

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

$                             38.4

$                        280.7

Weighted average diluted shares

91.7

92.2

Pro forma adjusted EPS - excluding special items

$                             0.42

$                          3.04

* Pro forma adjustment for January - August 2022 APM results (period before Avient ownership) including the impacts of debt financing and prepayments on net income from continuing operations.

Free Cash Flow Calculation

December 31,
2023

Cash provided by operating activities

$                       201.6

Taxes paid on gain on sale of business

104.1

Adjusted cash provided by operating activities

$                       305.7

Capital expenditures

$                      (119.4)

Free cash flow

$                       186.3

Three Months Ended
March 31, 2023

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

Net income from continuing operations attributable to Avient shareholders

$         20.8

$         0.23

Special items, after tax

22.3

0.24

Amortization expense, after-tax

15.1

0.16

Adjusted net income / EPS

$         58.2

$         0.63

Three Months Ended

December 31,

Year Ended

December 31,

Reconciliation to EBITDA and Pro Forma Adjusted EBITDA

2023

2022

2023

2022

Net income (loss) from continuing operations – GAAP

$          27.6

$         (16.6)

$          76.3

$          83.1

Income tax (benefit) expense

(7.0)

(60.8)

11.0

(19.3)

Interest expense

26.8

49.4

115.3

119.8

Depreciation and amortization from continuing operations

44.2

48.6

188.8

162.5

EBITDA from continuing operations

$          91.6

$          20.6

$        391.4

$        346.1

Special items, before tax

22.4

104.3

114.6

194.0

Interest expense included in special items

(0.1)

(16.0)

(2.3)

(26.0)

Depreciation and amortization included in special items

—

(1.5)

(1.9)

(5.5)

Adjusted EBITDA

$        113.9

$        107.4

$        501.8

$        508.6

APM pro forma adjustments - 8 months 2022*

—

—

—

83.1

Pro forma adjusted EBITDA 

$        113.9

$        107.4

$        501.8

$        591.7

* Pro forma adjustment for January - August 2022 APM results (period before Avient ownership).