Avient Announces First Quarter 2022 Results in Connection with Announcement to Acquire DSM Protective Materials (Dyneema®)

Attachment 1

Avient Corporation

Summary of Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended
March 31,

2022

2021

Sales

$    1,293.8

$    1,162.3

Operating Income

128.6

120.4

Net income attributable to Avient shareholders

84.2

79.3

Basic earnings per share attributable to Avient shareholders

$         0.92

$         0.87

Diluted earnings per share attributable to Avient shareholders

$         0.91

$         0.86

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income attributable to Avient shareholders

$        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

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended

March 31,

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 Avient shareholders

$             84.2

$             79.3

     Earnings per share attributable to Avient common shareholders - Basic

$             0.92

$             0.87

     Earnings per share attributable to Avient common shareholders - Diluted

$             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

Avient Corporation

Summary of Special Items (Unaudited)

(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended
March 31,

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

Avient Corporation

Condensed Consolidated Balance Sheets

(In millions)

(Unaudited)

March 31, 2022

December 31,
2021

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

Goodwill

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

Avient 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

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Three Months Ended

March 31,

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

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,

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

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

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%

Three Months Ended March 31,

2022

2021

GAAP Results

Special Items

Adjusted Results

GAAP Results

Special Items

Adjusted Results

Income from before income taxes

$  111.1

$        7.7

$ 118.8

$  102.6

$        2.4

$ 105.0

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

$ (26.6)

$      (0.5)

$  (27.1)

$ (22.9)

$        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

March 31,

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

March 31,

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