Avient Announces Record Second 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
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Sales

$

1,235.2

$

609.1

$

2,397.5

$

1,320.6

Operating Income

108.1

38.0

228.5

90.8

Net income from continuing operations attributable to Avient shareholders

68.8

23.0

148.1

56.1

Basic earnings per share from continuing operations attributable to Avient
shareholders

$

0.75

$

0.25

$

1.62

$

0.63

Diluted earnings per share from continuing operations attributable to Avient
shareholders

$

0.74

$

0.25

$

1.60

$

0.63

Three Months Ended
June 30, 2021

Three Months Ended

June 30, 2020

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

68.8

$

0.74

$

23.0

$

0.25

Special items, after tax (Attachment 3)

11.7

0.13

2.6

0.03

Adjusted net income / EPS - excluding special items

$

80.5

$

0.87

$

25.6

$

0.28

Six Months Ended
June 30, 2021

Six Months Ended
June 30, 2020

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

148.1

$

1.60

$

56.1

$

0.63

Special items, after tax (Attachment 3)

14.3

0.16

11.2

0.12

Adjusted net income / EPS - excluding special items

$

162.4

$

1.76

$

67.3

$

0.75

Attachment 2

Avient Corporation
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Sales

$

1,235.2

$

609.1

$

2,397.5

$

1,320.6

Cost of sales

946.5

459.4

1,806.4

999.4

Gross margin

288.7

149.7

591.1

321.2

Selling and administrative expense

180.6

111.7

362.6

230.4

Operating income

108.1

38.0

228.5

90.8

Interest expense, net

(19.5)

(16.2)

(38.8)

(25.6)

Other income, net

1.2

9.5

2.7

11.1

Income from continuing operations before income taxes

89.8

31.3

192.4

76.3

Income taxes

(20.4)

(7.9)

(43.3)

(19.8)

Net income from continuing operations

69.4

23.4

149.1

56.5

Loss from discontinued operations, net of income taxes

—

(0.2)

—

(0.5)

Net income

69.4

23.2

149.1

56.0

Net income attributable to noncontrolling interests

(0.6)

(0.4)

(1.0)

(0.4)

Net income attributable to Avient common shareholders

$

68.8

$

22.8

$

148.1

$

55.6

Earnings per share attributable to Avient common shareholders - Basic:

Continuing operations

$

0.75

$

0.25

$

1.62

$

0.63

Discontinued operations

—

—

—

—

Total

$

0.75

$

0.25

$

1.62

$

0.63

Earnings per share attributable to Avient common shareholders - Diluted:

Continuing operations

$

0.74

$

0.25

$

1.60

$

0.63

Discontinued operations

—

—

—

(0.01)

Total

$

0.74

$

0.25

$

1.60

$

0.62

Cash dividends declared per share of common stock

$

0.2125

$

0.2025

$

0.4250

$

0.4050

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

Basic

91.3

91.4

91.3

88.8

Diluted

92.4

91.8

92.3

89.4

Attachment 3

Avient Corporation
Summary of Special Items (Unaudited)
(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Cost of sales:

Restructuring costs, including accelerated depreciation and
amortization

$

(1.5)

$

(1.2)

$

(3.3)

$

(1.2)

Environmental remediation costs

(12.5)

(3.1)

(13.0)

(3.5)

Reimbursement of previously incurred environmental costs

—

8.5

4.5

8.7

Acquisition related costs

1.4

—

1.4

—

Impact on cost of sales

(12.6)

4.2

(10.4)

4.0

Selling and administrative expense:

Restructuring, legal and other

(1.4)

(3.5)

(2.7)

(5.3)

Acquisition earn-out adjustments

—

—

—

(1.0)

Acquisition related costs

(0.2)

(9.7)

(3.5)

(16.4)

Impact on selling and administrative expense

(1.6)

(13.2)

(6.2)

(22.7)

Impact on operating income

(14.2)

(9.0)

(16.6)

(18.7)

Costs related to committed financing in interest expense, net

—

(0.5)

—

(0.5)

Other income, net

—

0.2

—

0.3

   Pension settlement gain and mark-to-market adjustment

—

6.9

—

6.9

Impact on income from continuing operations before income taxes

(14.2)

(2.4)

(16.6)

(12.0)

Income tax benefit on above special items

3.4

0.7

4.3

2.7

Tax adjustments⁽²⁾

(0.9)

(0.9)

(2.0)

(1.9)

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

$

(11.7)

$

(2.6)

$

(14.3)

$

(11.2)

Diluted earnings per common share impact

$

(0.13)

$

(0.03)

$

(0.16)

$

(0.12)

Weighted average shares used to compute adjusted earnings per share:

Diluted

92.4

91.8

92.3

89.4

⁽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)

 June 30, 2021

December 31,

2020

ASSETS

Current assets:

Cash and cash equivalents

$

616.2

$

649.5

Accounts receivable, net

705.2

516.6

Inventories, net

412.5

327.5

Other current assets

124.2

108.5

Total current assets

1,858.1

1,602.1

Property, net

680.1

694.9

Goodwill

1,281.7

1,308.1

Intangible assets, net

944.9

1,008.5

Operating lease assets, net

87.3

80.9

Other non-current assets

195.3

176.0

Total assets

$

5,047.4

$

4,870.5

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$

18.8

$

18.6

Accounts payable

574.6

471.7

Current operating lease obligations

24.9

25.1

Accrued expenses and other current liabilities

316.0

285.6

Total current liabilities

934.3

801.0

Non-current liabilities:

Long-term debt

1,852.2

1,854.0

Pension and other post-retirement benefits

112.6

115.0

Non-current operating lease obligations

62.8

56.0

Other non-current liabilities

299.1

332.8

Total non-current liabilities

2,326.7

2,357.8

SHAREHOLDERS' EQUITY

Avient shareholders' equity

1,768.2

1,697.1

Noncontrolling interest

18.2

14.6

Total equity

1,786.4

1,711.7

Total liabilities and equity

$

5,047.4

$

4,870.5

Attachment 5

Avient Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)

Six Months Ended

June 30,

2021

2020

Operating Activities

Net income

$

149.1

$

56.0

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

Depreciation and amortization

69.5

40.8

Accelerated depreciation and amortization

1.4

—

Share-based compensation expense

5.6

5.7

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

(Increase) decrease in accounts receivable

(196.1)

16.8

(Increase) decrease in inventories

(88.1)

17.4

Increase (decrease) in accounts payable

108.4

(23.5)

Decrease in pension and other post-retirement benefits

(9.2)

(12.7)

Increase (decrease) in accrued expenses and other assets and liabilities, net

27.5

(3.5)

Payment of post-acquisition date earnout liability

—

(21.0)

Net cash provided by operating activities

68.1

76.0

Investing activities

Capital expenditures

(42.1)

(21.3)

Net proceeds from divestiture

—

7.1

Net cash proceeds provided by other assets

(2.0)

5.2

Net cash used by investing activities

(44.1)

(9.0)

Financing activities

Debt offering proceeds

—

650.0

Purchase of common shares for treasury

(4.2)

(13.6)

Cash dividends paid

(38.8)

(34.3)

Repayment of long-term debt

(4.4)

(4.2)

Payments of withholding tax on share awards

(4.2)

(1.6)

Debt financing costs

—

(9.7)

Equity offering proceeds, net of underwriting discount and issuance costs

—

496.1

Payment of acquisition date earnout liability

—

(32.9)

Net cash (used) provided by financing activities

(51.6)

1,049.8

Effect of exchange rate changes on cash

(5.7)

(4.5)

(Decrease) increase in cash and cash equivalents

(33.3)

1,112.3

Cash and cash equivalents at beginning of year

649.5

864.7

Cash and cash equivalents at end of period

$

616.2

$

1,977.0

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

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Sales:

   Color, Additives and Inks

$

624.4

$

226.8

$

1,233.7

$

483.3

   Specialty Engineered Materials

240.6

158.8

457.1

344.1

   Distribution

404.4

238.8

767.1

528.3

   Corporate and eliminations

(34.2)

(15.3)

(60.4)

(35.1)

      Sales

$

1,235.2

$

609.1

$

2,397.5

$

1,320.6

Gross margin:

   Color, Additives and Inks

$

193.4

$

75.7

$

390.9

$

165.1

   Specialty Engineered Materials

69.6

42.5

134.3

95.1

   Distribution

40.1

27.2

79.4

60.8

   Corporate and eliminations

(14.4)

4.3

(13.5)

0.2

      Gross margin

$

288.7

$

149.7

$

591.1

$

321.2

Selling and administrative expense:

   Color, Additives and Inks

$

107.1

$

43.4

$

215.8

$

92.3

   Specialty Engineered Materials

32.3

25.5

62.8

55.8

   Distribution

16.4

12.6

31.7

26.8

   Corporate and eliminations

24.8

30.2

52.3

55.5

      Selling and administrative expense

$

180.6

$

111.7

$

362.6

$

230.4

Operating income:

   Color, Additives and Inks

$

86.3

$

32.3

$

175.1

$

72.8

   Specialty Engineered Materials

37.3

17.0

71.5

39.3

   Distribution

23.7

14.6

47.7

34.0

   Corporate and eliminations

(39.2)

(25.9)

(65.8)

(55.3)

      Operating income

$

108.1

$

38.0

$

228.5

$

90.8

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

   Color, Additives and Inks

$

111.6

$

42.9

$

227.7

$

94.4

   Specialty Engineered Materials

45.4

24.6

87.4

54.4

   Distribution

23.9

14.7

48.1

34.2

   Corporate and eliminations

(39.0)

(23.3)

(63.8)

(51.4)

Other income, net

1.2

9.5

$

2.7

$

11.1

      EBITDA

$

143.1

$

68.4

$

302.1

$

142.7

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

June 30,

Six Months Ended

June 30,

Reconciliation to Consolidated Statements of Income

2021

2020

2021

2020

Sales

$

1,235.2

$

609.1

$

2,397.5

$

1,320.6

Gross margin - GAAP

288.7

149.7

591.1

321.2

Special items in gross margin (Attachment 3)

12.6

(4.2)

10.4

(4.0)

Adjusted gross margin

$

301.3

$

145.5

$

601.5

$

317.2

Adjusted gross margin as a percent of sales

24.4

%

23.9

%

25.1

%

24.0

%

Operating income - GAAP

108.1

38.0

228.5

90.8

Special items in operating income (Attachment 3)

14.2

9.0

16.6

18.7

Adjusted operating income

$

122.3

$

47.0

$

245.1

$

109.5

Adjusted operating income as a percent of sales

9.9

%

7.7

%

10.2

%

8.3

%

Three Months Ended June 30,

2021

2020

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special
Items

Adjusted
Results

Income from continuing operations before income taxes

$

89.8

$

14.2

$

104.0

$

31.3

$

2.4

$

33.7

Income tax expense - GAAP

(20.4)

—

(20.4)

(7.9)

—

(7.9)

Income tax impact of special items (Attachment 3)

—

(3.4)

(3.4)

—

(0.7)

(0.7)

Tax adjustments (Attachment 3)

—

0.9

0.9

—

0.9

0.9

Income tax (expense) benefit

$

(20.4)

$

(2.5)

$

(22.9)

$

(7.9)

$

0.2

$

(7.7)

Effective Tax Rate⁽¹⁾

22.7

%

22.0

%

25.1

%

22.5

%

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

Six Months Ended June 30,

2021

2020

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special
Items

Adjusted
Results

Income from continuing operations before income taxes

$

192.4

$

16.6

$

209.0

$

76.3

$

12.0

$

88.3

Income tax expense - GAAP

(43.3)

—

(43.3)

(19.8)

—

(19.8)

Income tax impact of special items (Attachment 3)

—

(4.3)

(4.3)

—

(2.7)

(2.7)

Tax adjustments (Attachment 3)

—

2.0

2.0

—

1.9

1.9

Income tax (expense) benefit

$

(43.3)

$

(2.3)

$

(45.6)

$

(19.8)

$

(0.8)

$

(20.6)

Effective Tax Rate⁽¹⁾

22.5

%

21.8

%

25.9

%

23.3

%

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

Reconciliation of Pro Forma Adjusted Earnings per Share:

Three Months
Ended

June 30, 2020

Six Months
Ended

June 30, 2020

Year Ended
December 31,
2020

Net income from continuing operations attributable to Avient
shareholders

$

23.0

$

56.1

$

132.0

Special items, after tax

2.6

11.2

24.8

Adjusted net income from continuing operations excluding special
items

25.6

67.3

156.8

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

12.9

20.7

20.7

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

$

38.5

$

88.0

$

177.5

Weighted average diluted shares

91.8

89.4

90.6

Pro forma impact to diluted shares from January 2020 equity
offering⁽²⁾

—

2.9

1.5

Pro forma weighted average diluted shares

91.8

92.3

92.1

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

$

0.42

$

0.95

$

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

Three Months Ended

June 30, 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

$

609.1

$

—

$

609.1

$

261.1

$

870.2

Operating income

$

38.0

$

9.0

$

47.0

$

22.0

$

69.0

Interest expense, net

(16.2)

—

(16.2)

(5.3)

(21.5)

Other income, net

9.5

(6.6)

2.9

—

2.9

Income taxes

(7.9)

0.2

(7.7)

(3.8)

(11.5)

Net income attributable to noncontrolling
interests

(0.4)

—

(0.4)

—

(0.4)

Net income from continuing operations
attributable to Avient shareholders

$

23.0

$

2.6

$

25.6

$

12.9

$

38.5

Weighted average diluted shares

91.8

Pro forma adjusted EPS

$

0.42

⁽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

Six Months Ended

June 30, 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

$

1,320.6

$

—

$

1,320.6

$

540.5

$

1,861.1

Operating income

$

90.8

$

18.7

$

109.5

$

45.0

$

154.5

Interest expense, net

(25.6)

—

(25.6)

(18.1)

(43.7)

Other income, net

11.1

(6.7)

4.4

—

4.4

Income taxes

(19.8)

(0.8)

(20.6)

(6.2)

(26.8)

Net income attributable to noncontrolling
interests

(0.4)

—

(0.4)

—

(0.4)

Net income from continuing operations
attributable to Avient shareholders

$

56.1

$

11.2

$

67.3

$

20.7

$

88.0

Weighted average diluted shares

89.4

Impact to diluted shares from January 2020 equity offering

2.9

Pro forma weighted average diluted shares

92.3

Pro forma adjusted EPS

$

0.95

⁽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

Reconciliation of EBITDA by Segment

Three Months Ended

June 30,

Six Months Ended

June 30

2021

2020

2021

2020

Operating income:

   Color, Additives and Inks

$

86.3

$

32.3

$

175.1

$

72.8

   Specialty Engineered Materials

37.3

17.0

71.5

39.3

   Distribution

23.7

14.6

47.7

34.0

   Corporate and eliminations

(39.2)

(25.9)

(65.8)

(55.3)

      Operating income

$

108.1

$

38.0

$

228.5

$

90.8

Items below OI in Corporate:

Other income, net

$

1.2

$

9.5

$

2.7

$

11.1

Depreciation & amortization:

Color, Additives and Inks

$

25.3

$

10.6

$

52.6

$

21.6

Specialty Engineered Materials

8.1

7.6

15.9

15.1

Distribution

0.2

0.1

0.4

0.2

Corporate and eliminations

0.2

2.6

2.0

3.9

Depreciation & Amortization

$

33.8

$

20.9

$

70.9

$

40.8

EBITDA:

   Color, Additives and Inks

$

111.6

$

42.9

$

227.7

$

94.4

   Specialty Engineered Materials

45.4

24.6

87.4

54.4

   Distribution

23.9

14.7

48.1

34.2

   Corporate and eliminations

(39.0)

(23.3)

(63.8)

(51.4)

      EBITDA

$

143.1

$

68.4

$

302.1

$

142.7

EBITDA as a % of Sales:

Color, Additives and Inks

17.9

%

18.9

%

18.5

%

19.5

%

Specialty Engineered Materials

18.9

%

15.5

%

19.1

%

15.8

%

Distribution

5.9

%

6.2

%

6.3

%

6.5

%

Reconciliation of Pro Forma EBITDA - Color, Additives and Inks

Three Months Ended

June 30,

Six Months Ended

June 30,

2021

2020

2021

2020

Sales:

   Color, Additives and Inks

$

624.4

$

226.8

$

1,233.7

$

483.3

   Clariant MB pro forma adjustments⁽²⁾

—

261.1

—

540.5

      Pro forma sales

$

624.4

$

487.9

$

1,233.7

$

1,023.8

Operating income:

   Color, Additives and Inks

$

86.3

$

32.3

$

175.1

$

72.8

   Clariant MB pro forma adjustments⁽²⁾

—

22.0

—

45.0

      Pro forma operating income

$

86.3

$

54.3

$

175.1

$

117.8

Depreciation & amortization:

Color, Additives and Inks

$

25.3

$

10.6

$

52.6

$

21.6

Clariant MB pro forma adjustments⁽²⁾

—

15.0

—

30.1

Pro forma depreciation & amortization

$

25.3

$

25.6

$

52.6

$

51.7

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

   Color, Additives and Inks

$

111.6

$

42.9

$

227.7

$

94.4

   Clariant MB pro forma adjustments⁽²⁾

—

37.0

—

75.1

      Pro forma EBITDA

$

111.6

$

79.9

$

227.7

$

169.5

Pro forma EBITDA as a % of Sales

17.9

%

16.4

%

18.5

%

16.6

%

⁽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

Three Months Ended
June 30,

Six Months Ended

June 30,

Reconciliation to Pro Forma Adjusted EBITDA:

2021

2020

2021

2020

Net income from continuing operations – GAAP

$

69.4

$

23.4

$

149.1

$

56.5

Income tax expense

20.4

7.9

43.3

19.8

Interest expense

19.5

16.2

38.8

25.6

Depreciation and amortization from continuing operations

33.8

20.9

70.9

40.8

EBITDA

$

143.1

$

68.4

$

302.1

$

142.7

Special items, before tax

14.2

2.4

16.6

12.0

Interest expense included in special items

—

(0.5)

—

(0.5)

Depreciation and amortization included in special items

1.4

(1.2)

0.8

(1.2)

Adjusted EBITDA 

$

158.7

$

69.1

$

319.5

$

153.0

Clariant MB pro forma adjustments⁽²⁾

—

37.0

—

75.1

Pro forma adjusted EBITDA

$

158.7

$

106.1

$

319.5

$

228.1

⁽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