Avient Announces Second Quarter 2020 Results

Rhea-AI Summary

Avient Corporation (NYSE: AVNT) reported its second quarter results for 2020 amidst the ongoing COVID-19 pandemic. While the pandemic impacted sales in the Americas and Europe, orders in Asia increased by 13%. Overall sales declined by 18.6%, primarily due to weak demand in automotive and consumer discretionary sectors. However, sales in healthcare applications and food packaging increased by 7% and 3%, respectively. The company successfully completed the acquisition of Clariant's masterbatch business, marking its largest acquisition to date, enhancing its specialty technology portfolio.

Positive

• Acquisition of Clariant's masterbatch business enhances portfolio.
• Sales in Asia increased by 13% during the second quarter.
• Sales in healthcare applications increased by 7%.

Negative

• Overall sales declined by 18.6% due to weak automotive and consumer demand.
• Sales in the Americas and Europe were significantly impacted by the pandemic.

CLEVELAND, July 22, 2020 /PRNewswire/ -- Avient Corporation (NYSE: AVNT), a leading provider of specialized and sustainable material solutions, today reported its second quarter results for 2020. 

"The COVID-19 pandemic continues to have a significant impact on the world, and our first priority remains the health and safety of our associates, customers and all stakeholders.  We continue to strictly adhere to government guidelines and protocols as well as other preventative measures to help stop the spread of the virus," said Robert M. Patterson, Chairman, President and Chief Executive Officer, Avient Corporation.

Commenting on the company's second quarter performance, Mr. Patterson said, "Following our update call on June 16th, we experienced an uptick in orders in Asia which also led to better than expected margins in the Color segment. Although the pandemic significantly impacted the Americas and Europe, sales in Asia increased 13% for the second quarter."

The company noted it is an essential supplier into many industries serving the COVID-19 response and recovery, including food and beverage packaging and healthcare applications.  Sales into these end markets increased 3% and 7% respectively during the quarter.  This was more than offset by weak automotive and consumer discretionary demand, as overall sales declined by 18.6% or 17% on a constant currency basis.

"Our recent efforts to expand our portfolio in less-cyclical, more specialty technologies has been a source of strength for us, as other markets have been significantly impacted by global lockdowns and stay-at-home orders," Mr. Patterson added.

"I'm extremely proud of our team's focus and execution to work through these challenges, while at the same time completing the acquisition of Clariant's masterbatch business, the largest acquisition in our company's 20-year history," Mr. Patterson said.  "In doing so, we've joined two exceptional businesses to form a global specialty enterprise, and we do so under our new name, Avient, as we announced on July 1^st." 

"We are excited about this next step in our specialty journey," Mr. Patterson added.  "Integration efforts are well underway, and I'm very pleased to see an immediate and high level of collaboration between our two organizations."

Management will provide more commentary related to its second quarter performance, the Clariant Masterbatch acquisition and initial thoughts on third quarter performance on its upcoming conference call.

Conference Call

Avient will conduct a conference call at 8:00 a.m. Eastern Time on July 22, 2020. To participate in the conference call, dial 1-844-835-7433 (domestic) or 1-914-495-8589 (international) and provide conference ID number 4192557. A simultaneous webcast of the call will be accessible via the Company's website at www.avient.com/investor.

A recording of the call will also be available for one week, beginning at 12:00 p.m. Eastern Time on July 22, 2020. To listen to this recording, dial 1-855-859-2056 (domestic) or 1-404-537-3406 (international) and enter conference ID number 4192557.

About Avient

Avient Corporation (NYSE: AVNT), with 2019 pro forma revenues of $4.0 billion, provides specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Examples include:

• Barrier technologies that preserve the shelf-life and quality of food, beverages, medicine and other perishable goods through high-performance materials that require less plastic
• Light-weighting solutions that replace heavier traditional materials like metal, glass and wood, which can improve fuel efficiency in all modes of transportation
• Breakthrough technologies that minimize wastewater and improve the recyclability of materials and packaging across a spectrum of end uses

Avient employs approximately 9,100 associates and is certified ACC Responsible Care® and a founding member of the Alliance to End Plastic Waste.  For more information, visit www.avient.com.

Forward-looking Statements 

In this press release, statements that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial condition, performance and/or sales. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include the impact the COVID-19 pandemic has on our business, results from operations, financial condition and liquidity; our ability to achieve the strategic and other objectives relating to the acquisition of Clariant's color and additive masterbatch business, including any expected synergies; our ability to successfully integrate Clariant's color and additive masterbatch business and achieve the expected results of the acquisition of Clariant's color and additive masterbatch business, including, without limitation, the acquisition being accretive; disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future; the effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory risks; changes in polymer consumption growth rates and laws and regulations regarding plastics in jurisdictions where we conduct business; changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online; fluctuations in raw material prices, quality and supply, and in energy prices and supply; production outages or material costs associated with scheduled or unscheduled maintenance programs; unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters; an inability to raise or sustain prices for products or services; an ability to achieve or delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to acquisitions and integration, working capital reductions, costs reductions and employee productivity goals; information systems failures and cyberattacks; and other factors affecting our business beyond our control, including, without limitation, changes in the general economy, changes in interest rates and changes in the rate of inflation. The above list of factors is not exhaustive.

We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any further disclosures we make on related subjects in our reports on Form 10-Q, 8-K and 10-K that we provide to the Securities and Exchange Commission.

To access Avient's news library online, please visit www.avient.com/news

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,
	2020		2019		2020		2019
Sales	$	609.1			$	748.2			$	1,320.6			$	1,498.8
Operating Income	38.0			46.1			90.8			93.2
Net income from continuing operations attributable to Avient shareholders	23.0			23.2			56.1			45.6
Basic earnings per share from continuing operations attributable to Avient shareholders	$	0.25			$	0.30			$	0.63			$	0.59
Diluted earnings per share from continuing operations attributable to Avient shareholders	$	0.25			$	0.30			$	0.63			$	0.58

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.

	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Reconciliation to Condensed Consolidated Statements of Income	$		EPS		$		EPS
Net income from continuing operations attributable to Avient shareholders	$	23.0			$	0.25			$	23.2			$	0.30
Special items, after tax (Attachment 3)	2.6			0.03			14.4			0.18
Adjusted net income / EPS - excluding special items	$	25.6			$	0.28			$	37.6			$	0.48
	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Reconciliation to Condensed Consolidated Statements of Income	$		EPS		$		EPS
Net income from continuing operations attributable to Avient shareholders	$	56.1			$	0.63			$	45.6			$	0.58
Special items, after tax (Attachment 3)	11.2			0.12			25.4			0.33
Adjusted net income / EPS - excluding special items	$	67.3			$	0.75			$	71.0			$	0.91

 

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,
	2020		2019		2020		2019
Sales	$	609.1			$	748.2			$	1,320.6			$	1,498.8
Cost of sales	459.4			572.9			999.4			1,155.4
Gross margin	149.7			175.3			321.2			343.4
Selling and administrative expense	111.7			129.2			230.4			250.2
Operating income	38.0			46.1			90.8			93.2
Interest expense, net	(16.2)			(16.2)			(25.6)			(32.1)
Other income, net	9.5			0.7			11.1			0.8
Income from continuing operations before income taxes	31.3			30.6			76.3			61.9
Income taxes	(7.9)			(7.4)			(19.8)			(16.2)
Net income from continuing operations	23.4			23.2			56.5			45.7
(Loss) income from discontinued operations, net of income taxes	(0.2)			18.9			(0.5)			34.7
Net income	23.2			42.1			56.0			80.4
Net income attributable to noncontrolling interests	(0.4)			—			(0.4)			(0.1)
Net income attributable to Avient common shareholders	$	22.8			$	42.1			$	55.6			$	80.3
Earnings per share attributable to Avient common shareholders - Basic:
Continuing operations	$	0.25			$	0.30			$	0.63			$	0.59
Discontinued operations	—			0.24			—			0.45
Total	$	0.25			$	0.54			$	0.63			$	1.04
Earnings (loss) per share attributable to Avient common shareholders - Diluted:
Continuing operations	$	0.25			$	0.30

FAQ

What were the sales results for Avient Corporation in Q2 2020?

Avient reported an overall sales decline of 18.6% in Q2 2020.

How did COVID-19 affect Avient's performance?

COVID-19 significantly impacted sales in the Americas and Europe, though sales in Asia rose.

What was the significance of the Clariant acquisition for Avient?

The acquisition of Clariant's masterbatch business is Avient's largest to date, enhancing its specialty technologies.

When will Avient discuss its Q2 performance further?

Avient will provide more insights during a conference call on July 22, 2020.