Avient Announces Fourth Quarter and Full Year 2020 Results and Provides Guidance for 2021

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,

2020

2019

2020

2019

Sales

$

997.0

$

658.6

$

3,242.1

$

2,862.7

Operating Income

65.0

20.5

189.3

156.8

Net income from continuing operations attributable to Avient shareholders

74.2

6.4

132.0

75.5

Basic earnings per share from continuing operations attributable to
Avient shareholders

$

0.81

$

0.08

$

1.47

$

0.98

Diluted earnings per share from continuing operations attributable to
Avient shareholders

$

0.81

$

0.08

$

1.46

$

0.97

Three Months Ended
December 31,

2020

2019

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$

74.2

$

0.81

$

6.4

$

0.08

Special items, after tax (Attachment 3)

(26.7)

(0.29)

19.9

0.26

Adjusted net income / EPS - excluding special items

$

47.5

$

0.52

$

26.3

$

0.34

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

Year Ended
December 31,

2020

2019

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$

132.0

$

1.46

$

75.5

$

0.97

Special items, after tax (Attachment 3)

24.8

0.27

55.8

0.72

Adjusted net income / EPS - excluding special items

$

156.8

1.73

$

131.3

1.69

⁽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,

2020

2019

2020

2019

Sales

$

997.0

$

658.6

$

3,242.1

$

2,862.7

Cost of sales

744.1

505.3

2,457.8

2,205.5

Gross margin

252.9

153.3

784.3

657.2

Selling and administrative expense

187.9

132.8

595.0

500.4

Operating income

65.0

20.5

189.3

156.8

Interest expense, net

(19.3)

(11.9)

(74.6)

(59.5)

Other income, net

11.7

10.7

24.3

12.1

Income from continuing operations before income taxes

57.4

19.3

139.0

109.4

Income tax benefit (expense)

17.3

(12.9)

(5.2)

(33.7)

Net income from continuing operations

74.7

6.4

133.8

75.7

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

0.1

458.9

(0.4)

513.1

Net income

74.8

465.3

133.4

588.8

Net income attributable to noncontrolling interests

(0.5)

—

(1.8)

(0.2)

Net income attributable to Avient common shareholders

$

74.3

$

465.3

$

131.6

$

588.6

Earnings per share attributable to Avient common shareholders - Basic:

Continuing operations

$

0.81

$

0.08

$

1.47

$

0.98

Discontinued operations

—

5.97

(0.01)

6.64

Total

$

0.81

$

6.05

$

1.46

$

7.62

Earnings per share attributable to Avient common shareholders - Diluted:

Continuing operations

$

0.81

$

0.08

$

1.46

$

0.97

Discontinued operations

—

5.92

(0.01)

6.61

Total

$

0.81

$

6.00

$

1.45

$

7.58

Cash dividends declared per share of common stock

$

0.2125

$

0.2025

$

0.8200

$

0.7875

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

Basic

91.4

76.9

90.1

77.2

Diluted

92.1

77.5

90.6

77.7

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,

2020

2019

2020

2019

Cost of sales:

Restructuring costs, including accelerated depreciation

$

(1.8)

$

—

$

(4.3)

$

0.3

Environmental remediation costs

(1.1)

0.3

(20.4)

(10.1)

Reimbursement of previously incurred environmental costs

—

0.5

8.7

4.5

Inventory fair market value step-up expense

1.2

—

(9.3)

(2.0)

Impact on cost of sales

(1.7)

0.8

(25.3)

(7.3)

Selling and administrative expense:

Restructuring, legal and other

(13.0)

(4.4)

(22.5)

(18.6)

Acquisition earn-out adjustments

1.5

(15.7)

(1.0)

(36.4)

Acquisition related costs

(1.4)

(5.3)

(24.9)

(9.4)

Impact on selling and administrative expense

(12.9)

(25.4)

(48.4)

(64.4)

Impact on operating income

(14.6)

(24.6)

(73.7)

(71.7)

Costs related to committed financing in interest expense, net

—

—

(10.1)

—

Other income, net

0.1

0.1

0.4

0.5

   Pension settlement/curtailment gains and mark-to-market adjustment

10.3

9.5

17.2

9.5

Impact on income from continuing operations before income taxes

(4.2)

(15.0)

(66.2)

(61.7)

Income tax benefit (expense) on above special items

(1.3)

(0.4)

14.1

11.1

Tax adjustments⁽²⁾

32.2

(4.5)

27.3

(5.2)

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

$

26.7

$

(19.9)

$

(24.8)

$

(55.8)

Diluted earnings per common share impact of special items on net income
from continuing operations attributable to Avient shareholders

$

0.29

$

(0.26)

$

(0.27)

$

(0.72)

Weighted average shares used to compute adjusted earnings per share:

Diluted

92.1

77.5

90.6

77.7

⁽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, adjustments to uncertain tax position reserves and deferred income tax valuation allowances.

Attachment 4

Avient Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In millions)

Year Ended
December 31,

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

649.5

$

864.7

Accounts receivable, net

516.6

330.0

Inventories, net

327.5

260.9

Other current assets

89.9

57.7

Total current assets

1,583.5

1,513.3

Property, net

694.9

407.4

Goodwill

1,308.1

685.7

Intangible assets, net

1,008.5

469.3

Operating lease assets, net

80.9

63.8

Other non-current assets

195.4

133.8

Total assets

$

4,871.3

$

3,273.3

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$

18.6

$

18.4

Accounts payable

471.7

287.7

Current operating lease obligations

25.1

21.0

Accrued expenses and other current liabilities

289.2

375.4

Total current liabilities

804.6

702.5

Non-current liabilities:

Long-term debt

1,854.0

1,210.9

Pension and other post-retirement benefits

115.0

56.6

Deferred income taxes

150.7

63.5

Non-current operating lease obligations

56.0

42.8

Other non-current liabilities

192.8

144.3

Total non-current liabilities

2,368.5

1,518.1

SHAREHOLDERS' EQUITY

Avient shareholders' equity

1,683.6

1,051.9

Noncontrolling interest

14.6

0.8

Total equity

1,698.2

1,052.7

Total liabilities and equity

$

4,871.3

$

3,273.3

Attachment 5

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Year Ended
December 31,

2020

2019

Operating activities

Net income

$

133.4

$

588.8

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

Gain on sale of business, net of tax

—

(457.7)

Depreciation and amortization

111.8

87.5

Accelerated depreciation and fixed asset charges associated with restructuring activities

3.2

—

Deferred income tax benefit

(1.1)

(3.2)

Share-based compensation expense

11.3

11.6

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

(Increase) decrease in accounts receivable

(4.6)

29.7

Decrease in inventories

40.2

40.2

Increase (decrease) in accounts payable

79.5

(22.7)

Increase (decrease) in pension and other post-retirement benefits

30.7

(19.7)

Increase in post-acquisition earnout liabilities

1.0

36.4

(Decrease) increase in accrued expenses and other assets and liabilities - net

(3.7)

9.9

Taxes paid on gain on sale of business

(142.0)

—

Payment of post-acquisition date earnout liability

(38.1)

—

Net cash provided by operating activities

221.6

300.8

Investing activities

Capital expenditures

(63.7)

(81.7)

Business acquisitions, net of cash acquired

(1,380.2)

(119.6)

Net proceeds from divestiture

7.1

761.8

Net proceeds from other assets

5.2

51.4

Net cash (used) provided by investing activities

(1,431.6)

611.9

Financing activities

Debt offering proceeds

650.0

—

Borrowings under credit facilities

—

963.4

Repayments under credit facilities

—

(1,083.9)

Purchase of common shares for treasury

(22.4)

(26.9)

Cash dividends paid

(71.3)

(60.3)

Repayment of other debt

—

(1.8)

Repayment of long-term debt

(7.8)

(6.5)

Payments on withholding tax on share awards

(2.3)

(2.1)

Debt financing costs

(9.5)

(0.2)

Equity offering proceeds, net of underwriting discount and issuance costs

496.1

—

Payment of acquisition date earnout liability

(50.8)

—

Net cash provided (used) by financing activities

982.0

(218.3)

Effect of exchange rate changes on cash

12.8

(0.6)

(Decrease) increase in cash and cash equivalents

(215.2)

693.8

Cash and cash equivalents at beginning of year

864.7

170.9

Cash and cash equivalents at end of year

$

649.5

$

864.7

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,

2020

2019

2020

2019

Sales:

   Color, Additives and Inks

$

525.8

$

226.7

$

1,502.9

$

1,003.8

   Specialty Engineered Materials

190.6

177.5

708.8

745.7

   Distribution

305.1

272.4

1,110.3

1,192.2

   Corporate and eliminations

(24.5)

(18.0)

(79.9)

(79.0)

      Sales

$

997.0

$

658.6

$

3,242.1

$

2,862.7

Gross margin:

   Color, Additives and Inks

$

164.3

$

73.9

$

484.4

$

338.4

   Specialty Engineered Materials

59.1

47.7

207.6

200.2

   Distribution

32.4

31.0

124.0

132.1

   Corporate and eliminations

(2.9)

0.7

(31.7)

(13.5)

      Gross margin

$

252.9

$

153.3

$

784.3

$

657.2

Selling and administrative expense:

   Color, Additives and Inks

$

106.8

$

46.7

$

303.6

$

191.0

   Specialty Engineered Materials

28.7

28.9

113.2

116.5

   Distribution

14.4

14.0

54.5

56.7

   Corporate and eliminations

38.0

43.2

123.7

136.2

      Selling and administrative expense

$

187.9

$

132.8

$

595.0

$

500.4

Operating income:

   Color, Additives and Inks

$

57.5

$

27.2

$

180.8

$

147.4

   Specialty Engineered Materials

30.4

18.8

94.4

83.7

   Distribution

18.0

17.0

69.5

75.4

   Corporate and eliminations

(40.9)

(42.5)

(155.4)

(149.7)

      Operating income

$

65.0

$

20.5

$

189.3

$

156.8

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 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
December 31,

Year Ended
December 31,

Reconciliation to Consolidated Statements of Income

2020

2019

2020

2019

Sales

$

997.0

$

658.6

$

3,242.1

$

2,862.7

Gross margin - GAAP

252.9

153.3

784.3

657.2

Special items in gross margin (Attachment 3)

1.7

(0.8)

25.3

7.3

Adjusted Gross margin

$

254.6

$

152.5

$

809.6

$

664.5

Adjusted Gross margin as a percent of sales

25.5

%

23.2

%

25.0

%

23.2

%

Operating income - GAAP

65.0

20.5

189.3

156.8

Special items in operating income (Attachment 3)

14.6

24.6

73.7

71.7

Adjusted Operating income

$

79.6

$

45.1

$

263.0

$

228.5

Adjusted Operating income as a percent of sales

8.0

%

6.8

%

8.1

%

8.0

%

Three Months Ended
December 31,

2020

2019

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special
Items

Adjusted
Results


Income from continuing operations before income taxes

$

57.4

$

4.2

$

61.6

$

19.3

$

15.0

$

34.3

Income tax (expense) benefit - GAAP

17.3

—

17.3

(12.9)

—

(12.9)

Income tax impact of special items (Attachment 3)

—

1.3

1.3

—

0.4

0.4

Tax adjustments (Attachment 3)

—

(32.2)

(32.2)

—

4.5

4.5

Income tax (expense) benefit

$

17.3

$

(30.9)

$

(13.6)

$

(12.9)

$

4.9

$

(8.0)

Effective Tax Rate⁽¹⁾

(30.1)

%

22.1

%

66.8

%

23.3

%

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

Year Ended
December 31,

2020

2019

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special
Items

Adjusted
Results


Income from continuing operations before income taxes

$

139.0

$

66.2

$

205.2

$

109.4

$

61.7

$

171.1

Income tax expense - GAAP

(5.2)

—

(5.2)

(33.7)

—

(33.7)

Income tax impact of special items (Attachment 3)

—

(14.1)

(14.1)

—

(11.1)

(11.1)

Tax adjustments (Attachment 3)

—

(27.3)

(27.3)

—

5.2

5.2

Income tax expense

$

(5.2)

$

(41.4)

$

(46.6)

$

(33.7)

$

(5.9)

$

(39.6)

Effective Tax Rate⁽¹⁾

3.7

%

22.7

%

30.8

%

23.1

%

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

Reconciliation of Pro Forma Adjusted Earnings per Share:

Three Months Ended
December 31,

Year Ended
December 31,

2019

2020

2019

Net income from continuing operations attributable to
Avient shareholders

$

6.4

$

132.0

$

75.5

Special items, after tax (Attachment 3)

19.9

24.8

55.8

Adjusted net income from continuing operations
excluding special items

26.3

156.8

131.3

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

1.6

20.7

30.4

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

$

27.9

$

177.5

$

161.7

Weighted average diluted shares

77.5

90.6

77.7

Pro forma impact to diluted shares from January 2020
equity offering

15.3

1.5

15.3

Pro forma weighted average diluted shares

92.8

92.1

93.0

Pro forma adjusted EPS - excluding special items pro
forma for Clariant MB acquisition

$

0.30

$

1.93

$

1.74

⁽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, 2020

Sales

$

3,242.1

Clariant MB pro forma adjustment to sales⁽²⁾

540.4

Pro forma sales

$

3,782.5

⁽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