Avient Announces Third Quarter 2020 Results

Attachment 1

 Avient Corporation

Summary of Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Sales

$

924.5

$

705.3

$

2,245.1

$

2,204.1

Operating Income

33.5

43.1

124.3

136.3

Net income from continuing operations attributable to Avient shareholders

1.7

23.5

57.8

69.1

Basic earnings per share from continuing operations attributable to Avient shareholders

$

0.02

$

0.31

$

0.64

$

0.89

Diluted earnings per share from continuing operations attributable to Avient shareholders

$

0.02

$

0.30

$

0.64

$

0.89

Three Months Ended
2020年9月30日

Three Months Ended
2019年9月30日

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

1.7

$

0.02

$

23.5

$

0.30

Special items, after tax (Attachment 3)

40.3

0.44

10.5

0.14

Adjusted net income / EPS - excluding special items

$

42.0

$

0.46

$

34.0

$

0.44

Nine Months Ended
2020年9月30日

Nine Months Ended
2019年9月30日

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

57.8

$

0.64

$

69.1

$

0.89

Special items, after tax (Attachment 3)

51.5

0.57

35.9

0.46

Adjusted net income / EPS - excluding special items

$

109.3

$

1.21

$

105.0

$

1.35

Three Months Ended
2020年9月30日

Three Months Ended
2019年9月30日

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

1.7

$

0.02

$

23.5

$

0.30

Special items and the impact of Clariant MB step-up depreciation and amortization, after tax (Attachment 7)

47.5

0.52

10.5

0.14

Adjusted net income / EPS - excluding special items and Clariant MB step-up depreciation and amortization

$

49.2

$

0.54

$

34.0

$

0.44

Nine Months Ended
2020年9月30日

Nine Months Ended
2019年9月30日

Reconciliation to Condensed Consolidated Statements of Income

$

EPS

$

EPS

Net income from continuing operations attributable to Avient shareholders

$

57.8

$

0.64

$

69.1

$

0.89

Special items and the impact of Clariant MB step-up depreciation and amortization, after tax (Attachment 7)

58.7

0.65

35.9

0.46

Adjusted net income / EPS - excluding special items and Clariant MB step-up depreciation and amortization

$

116.5

$

1.29

$

105.0

$

1.35

Attachment 2

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Sales

$

924.5

$

705.3

$

2,245.1

$

2,204.1

Cost of sales

714.3

544.8

1,713.7

1,700.2

Gross margin

210.2

160.5

531.4

503.9

Selling and administrative expense

176.7

117.4

407.1

367.6

Operating income

33.5

43.1

124.3

136.3

Interest expense, net

(29.7)

(15.5)

(55.3)

(47.6)

Other income, net

1.5

0.6

12.6

1.4

Income from continuing operations before income taxes

5.3

28.2

81.6

90.1

Income taxes

(2.7)

(4.6)

(22.5)

(20.8)

Net income from continuing operations

2.6

23.6

59.1

69.3

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

—

19.5

(0.5)

54.2

Net income

2.6

43.1

58.6

123.5

Net income attributable to noncontrolling interests

(0.9)

(0.1)

(1.3)

(0.2)

Net income attributable to Avient common shareholders

$

1.7

$

43.0

$

57.3

$

123.3

Earnings per share attributable to Avient common shareholders - Basic:

Continuing operations

$

0.02

$

0.31

$

0.64

$

0.89

Discontinued operations

—

0.25

—

0.71

Total

$

0.02

$

0.56

$

0.64

$

1.60

Earnings per share attributable to Avient common shareholders - Diluted:

Continuing operations

$

0.02

$

0.30

$

0.64

$

0.89

Discontinued operations

—

0.26

(0.01)

0.69

Total

$

0.02

$

0.56

$

0.63

$

1.58

Cash dividends declared per share of common stock

$

0.2025

$

0.1950

$

0.6075

$

0.5850

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

Basic

91.5

76.9

89.7

77.3

Diluted

91.9

77.4

90.7

77.8

Attachment 3

Avient Corporation

Summary of Special Items (Unaudited)

(In millions, except per share data)

Special items ⁽¹⁾

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Cost of sales:

Restructuring costs, including accelerated depreciation and amortization

$

(1.3)

$

—

$

(2.5)

$

0.3

Environmental remediation costs

(15.8)

(6.4)

(19.3)

(10.4)

Reimbursement of previously incurred environmental costs

—

4.0

8.7

4.0

Inventory fair market value step-up expense

(10.5)

—

(10.5)

(2.0)

Impact on cost of sales

(27.6)

(2.4)

(23.6)

(8.1)

Selling and administrative expense:

Restructuring, legal and other

(6.9)

(3.0)

(15.3)

(15.0)

Acquisition earn-out adjustments

(1.5)

(10.0)

(2.5)

(20.7)

Acquisition related costs

(4.4)

(1.0)

(17.7)

(3.3)

Impact on selling and administrative expense

(12.8)

(14.0)

(35.5)

(39.0)

Impact on operating income

(40.4)

(16.4)

(59.1)

(47.1)

Costs related to committed financing in interest expense, net

(9.6)

—

(10.1)

—

Other income, net

—

0.1

0.3

0.4

  Pension settlement gain and mark-to-market adjustment

—

—

6.9

—

Impact on income from continuing operations before income taxes

(50.0)

(16.3)

(62.0)

(46.7)

Income tax benefit on above special items

12.7

4.1

15.4

11.5

Tax adjustments⁽²⁾

(3.0)

1.7

(4.9)

(0.7)

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

$

(40.3)

$

(10.5)

$

(51.5)

$

(35.9)

Diluted earnings per common share impact, excluding Clariant MB step-up depreciation and amortization

$

(0.44)

$

(0.14)

$

(0.57)

$

(0.46)

Weighted average shares used to compute adjusted earnings per share:

Diluted

91.9

77.4

90.7

77.8

⁽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 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)
September 30, 2020

December 31,

2019

ASSETS

Current assets:

Cash and cash equivalents

$

577.3

$

864.7

Accounts receivable, net

514.3

330.0

Inventories, net

311.4

260.9

Other current assets

94.8

57.7

Total current assets

1,497.8

1,513.3

Property, net

674.5

407.4

Goodwill

1,280.0

685.7

Intangible assets, net

993.0

469.3

Operating lease assets, net

88.3

63.8

Other non-current assets

176.3

133.8

Total assets

$

4,709.9

$

3,273.3

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$

18.7

$

18.4

Accounts payable

403.6

287.7

Current operating lease obligations

25.3

21.0

Accrued expenses and other current liabilities

321.3

375.4

Total current liabilities

768.9

702.5

Non-current liabilities:

Long-term debt

1,855.2

1,210.9

Pension and other post-retirement benefits

113.8

56.6

Non-current operating lease obligations

63.0

42.8

Other non-current liabilities

297.9

207.8

Total non-current liabilities

2,329.9

1,518.1

SHAREHOLDERS' EQUITY

Avient shareholders' equity

1,597.0

1,051.9

Noncontrolling interest

14.1

0.8

Total equity

1,611.1

1,052.7

Total liabilities and equity

$

4,709.9

$

3,273.3

Attachment 5

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)

Nine Months Ended
September 30,

2020

2019

Operating Activities

Net income

$

58.6

$

123.5

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

Depreciation and amortization

74.8

68.4

Accelerated depreciation and amortization

2.5

—

Share-based compensation expense

7.1

8.7

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

Increase in accounts receivable

(12.7)

(12.7)

Decrease in inventories

53.0

20.0

Increase (decrease) in accounts payable

21.3

(28.3)

Decrease in pension and other post-retirement benefits

(14.4)

(7.0)

Increase in post-acquisition earnout liabilities

2.5

20.7

Increase in accrued expenses and other assets and liabilities, net

56.1

5.3

Taxes paid on gain on divestiture

(142.0)

—

Payment of post-acquisition date earnout liability

(38.1)

—

Net cash provided by operating activities

68.7

198.6

Investing activities

Capital expenditures

(38.6)

(47.9)

Business acquisitions, net of cash acquired

(1,342.7)

(119.6)

Net proceeds from divestiture

7.1

—

Net proceeds from other assets

5.2

5.3

Net cash used by investing activities

(1,369.0)

(162.2)

Financing activities

Debt offering proceeds

650.0

—

Borrowings under credit facilities

—

882.4

Repayments under credit facilities

—

(808.5)

Purchase of common shares for treasury

(13.6)

(26.9)

Cash dividends paid

(52.8)

(45.7)

Repayment of long-term debt

(6.0)

(4.9)

Payments of withholding tax on share awards

(1.9)

(2.0)

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

1,011.5

(5.8)

Effect of exchange rate changes on cash

1.4

(1.9)

(Decrease) increase in cash and cash equivalents

(287.4)

28.7

Cash and cash equivalents at beginning of year

864.7

170.9

Cash and cash equivalents at end of period

$

577.3

$

199.6

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

September 30,

Nine Months Ended

September 30,

2020

2019

2020

2019

Sales:

  Color, Additives and Inks

$

493.8

$

246.3

$

977.1

$

777.1

  特种工程材料

174.1

183.0

518.2

568.2

  Distribution

276.9

295.9

805.2

919.8

  Corporate and eliminations

(20.3)

(19.9)

(55.4)

(61.0)

     Sales

$

924.5

$

705.3

$

2,245.1

$

2,204.1

Gross margin:

  Color, Additives and Inks

$

155.0

$

83.7

$

320.1

$

264.5

  特种工程材料

53.4

48.1

148.5

152.5

  Distribution

30.8

32.7

91.6

101.1

  Corporate and eliminations

(29.0)

(4.0)

(28.8)

(14.2)

     Gross margin

$

210.2

$

160.5

$

531.4

$

503.9

Selling and administrative expense:

  Color, Additives and Inks

$

104.5

$

45.3

$

196.8

$

144.3

  特种工程材料

28.7

28.6

84.5

87.6

  Distribution

13.3

13.9

40.1

42.7

  Corporate and eliminations

30.2

29.6

85.7

93.0

     Selling and administrative expense

$

176.7

$

117.4

$

407.1

$

367.6

Operating income:

  Color, Additives and Inks

$

50.5

$

38.4

$

123.3

$

120.2

  特种工程材料

24.7

19.5

64.0

64.9

  Distribution

17.5

18.8

51.5

58.4

  Corporate and eliminations

(59.2)

(33.6)

(114.5)

(107.2)

     Operating income

$

33.5

$

43.1

$

124.3

$

136.3

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

  Color, Additives and Inks

$

76.8

$

49.2

$

171.3

$

152.5

  特种工程材料

32.2

27.2

86.7

87.7

  Distribution

17.7

18.9

51.9

58.8

  Corporate and eliminations

(55.2)

(31.9)

(95.7)

(102.3)

     EBITDA

$

71.5

$

63.4

$

214.2

$

196.7

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

September 30,

Nine Months Ended

September 30,

Reconciliation to Consolidated Statements of Income

2020

2019

2020

2019

Sales

$

924.5

$

705.3

$

2,245.1

$

2,204.1

Gross margin - GAAP

210.2

160.5

531.4

503.9

Special items in gross margin (Attachment 3)

27.6

2.4

23.6

8.1

Adjusted Gross margin

$

237.8

$

162.9

$

555.0

$

512.0

Adjusted Gross margin as a percent of sales

25.7

%

23.1

%

24.7

%

23.2

%

Operating income - GAAP

33.5

43.1

124.3

136.3

Special items in operating income (Attachment 3)

40.4

16.4

59.1

47.1

Adjusted Operating income

$

73.9

$

59.5

$

183.4

$

183.4

Adjusted Operating income as a percent of sales

8.0

%

8.4

%

8.2

%

8.3

%

Three Months Ended

2020年9月30日

Three Months Ended

2019年9月30日

GAAP
结果

Special
Items

Adjusted
结果

GAAP
结果

Special
Items

Adjusted
结果

Income from continuing operations before income taxes

$

5.3

$

50.0

$

55.3

$

28.2

$

16.3

$

44.5

Income tax expense - GAAP

(2.7)

—

(2.7)

(4.6)

—

(4.6)

Income tax impact of special items (Attachment 3)

—

(12.7)

(12.7)

—

(4.1)

(4.1)

Tax adjustments (Attachment 3)

—

3.0

3.0

—

(1.7)

(1.7)

Income tax (expense) benefit

$

(2.7)

$

(9.7)

$

(12.4)

$

(4.6)

$

(5.8)

$

(10.4)

Effective Tax Rate⁽¹⁾

51.9

%

22.7

%

16.4

%

23.5

%

Nine Months Ended

2020年9月30日

Nine Months Ended

2019年9月30日

GAAP
结果

Special
Items

Adjusted
结果

GAAP
结果

Special
Items

Adjusted
结果

Income from continuing operations before income taxes

$

81.6

$

62.0

$

143.6

$

90.1

$

46.7

$

136.8

Income tax expense - GAAP

(22.5)

—

(22.5)

(20.8)

—

(20.8)

Income tax impact of special items (Attachment 3)

—

(15.4)

(15.4)

—

(11.5)

(11.5)

Tax adjustments (Attachment 3)

—

4.9

4.9

—

0.7

0.7

Income tax expense

$

(22.5)

$

(10.5)

$

(33.0)

$

(20.8)

$

(10.8)

$

(31.6)

Effective Tax Rate⁽¹⁾

27.6

%

23.0

%

23.1

%

23.2

%

⁽¹⁾ 

Rate may not recalculate from figures presented herein due to rounding.

Reconciliation to Adjusted EBITDA

Three Months Ended
2020年9月30日

Three Months Ended
2019年9月30日

Net income from continuing operations – GAAP

$

2.6

$

23.6

Income tax expense

2.7

4.6

Interest expense

29.7

15.5

Depreciation and amortization from continuing operations

36.5

19.7

EBITDA

71.5

63.4

Special items, before tax (Attachment 3)

50.0

16.3

Interest expense included in special items (Attachment 3)

(9.6)

—

Accelerated depreciation included in special items (Attachment 3)

(1.3)

—

Adjusted EBITDA

$

110.6

$

79.7

Reconciliation to Adjusted EBITDA

Nine Months Ended
2020年9月30日

Nine Months Ended
2019年9月30日

Net income from continuing operations – GAAP

$

59.1

$

69.3

Income tax expense

22.5

20.8

Interest expense

55.3

47.6

Depreciation and amortization from continuing operations

77.3

59.0

EBITDA

214.2

196.7

Special items, before tax (Attachment 3)

62.0

46.7

Interest expense included in special items (Attachment 3)

(10.1)

—

Accelerated depreciation included in special items (Attachment 3)

(2.5)

—

Adjusted EBITDA

$

263.6

$

243.4

Reconciliation of EBITDA by Segment

Three Months Ended

September 30,

Nine Months Ended

September 30,

2020

2019

2020

2019

Operating income:

  Color, Additives and Inks

$

50.5

$

38.4

$

123.3

$

120.2

  特种工程材料

24.7

19.5

64.0

64.9

  Distribution

17.5

18.8

51.5

58.4

  Corporate and eliminations

(59.2)

(33.6)

(114.5)

(107.2)

     Operating income

$

33.5

$

43.1

$

124.3

$

136.3

Items Below OI in Corporate

Other income, net

$

1.5

$

0.6

$

12.6

$

1.4

Depreciation & Amortization:

Color, Additives and Inks

$

26.3

$

10.8

$

48.0

$

32.3

特种工程材料

7.5

7.7

22.7

22.8

Distribution

0.2

0.1

0.4

0.4

Corporate and eliminations

2.5

1.1

6.2

3.5

Depreciation & Amortization

$

36.5

$

19.7

$

77.3

$

59.0

EBITDA

  Color, Additives and Inks

$

76.8

$

49.2

$

171.3

$

152.5

  特种工程材料

32.2

27.2

86.7

87.7

  Distribution

17.7

18.9

51.9

58.8

  Corporate and eliminations

(55.2)

(31.9)

(95.7)

(102.3)

     EBITDA

$

71.5

$

63.4

$

214.2

$

196.7

Free Cash Flow Calculation

Three Months Ended

2020年9月30日

Cash used by operating activities

$

(7.3)

Capital expenditures

(17.3)

Free Cash Flow

(24.6)

Payment of post-acquisition date earnout liability

17.1

Taxes paid on gain on sale of PP&S divestiture

138.7

Net effect of timing items related to Clariant MB

(24.3)

Adjusted Free Cash Flow 

$

106.9

Three Months Ended 2019年9月30日

Free Cash Flow Calculation

Continuing
Operations

Discontinued

Operations

Total

Cash provided by operating activities

$

70.1

$

29.1

$

99.2

Capital expenditures

17.5

3.9

21.4

Free Cash Flow 

$

52.6

$

25.2

$

77.8

Reconciliation to Adjusted net income / EPS - Excluding Special Items and Clariant MB Step-up Depreciation and Amortization

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

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

$

(40.3)

$

(10.5)

$

(51.5)

$

(35.9)

Clariant MB step-up depreciation and amortization, net of tax

(7.2)

—

(7.2)

—

Impact of special items on net income from continuing operations attributable to Avient Shareholders and Clariant MB step-up depreciation & amortization