Avient Announces Record Fourth Quarter and Full Year 2021 Results

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,

2021

2020

2021

2020

Sales

$    1,201.5

$       997.0

$    4,818.8

$    3,242.1

Operating Income

74.0

65.0

381.2

189.3

Net income from continuing operations attributable to Avient
shareholders

29.8

74.2

230.8

132.0

Basic earnings per share from continuing operations attributable to
Avient shareholders

$         0.33

$         0.81

$         2.53

$         1.47

Diluted earnings per share from continuing operations attributable to
Avient shareholders

$         0.32

$         0.81

$         2.51

$         1.46

Three Months Ended

December 31,

2021

2020

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$         29.8

$         0.32

$         74.2

$         0.81

Special items, after tax (Attachment 3)

24.0

0.26

(26.7)

(0.29)

Adjusted net income / EPS - excluding special items

$         53.8

$         0.58

$         47.5

$         0.52

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

Year Ended

December 31,

2021

2020

Reconciliation to Condensed Consolidated Statements of Income

$

EPS⁽¹⁾ 

$

EPS⁽¹⁾ 

Net income from continuing operations attributable to Avient shareholders

$       230.8

$         2.51

$       132.0

$         1.46

Special items, after tax (Attachment 3)

50.0

0.54

24.8

0.27

Adjusted net income / EPS - excluding special items

$       280.8

3.05

$       156.8

1.73

⁽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,

2021

2020

2021

2020

Sales

$    1,201.5

$        997.0

$    4,818.8

$    3,242.1

Cost of sales

948.4

744.1

3,719.2

2,457.8

Gross margin

253.1

252.9

1,099.6

784.3

Selling and administrative expense

179.1

187.9

718.4

595.0

Operating income

74.0

65.0

381.2

189.3

Interest expense, net

(17.5)

(19.3)

(75.3)

(74.6)

Other (expense) income, net

(5.4)

11.7

(1.3)

24.3

Income from continuing operations before income taxes

51.1

57.4

304.6

139.0

Income tax (expense) benefit

(22.2)

17.3

(74.0)

(5.2)

Net income from continuing operations

28.9

74.7

230.6

133.8

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

—

0.1

—

(0.4)

Net income

28.9

74.8

230.6

133.4

Net loss (income) attributable to noncontrolling interests

0.9

(0.5)

0.2

(1.8)

Net income attributable to Avient common shareholders

$          29.8

$          74.3

$        230.8

$        131.6

Earnings per share attributable to Avient common shareholders - Basic:

Continuing operations

$          0.33

$          0.81

$          2.53

$          1.47

Discontinued operations

—

—

—

(0.01)

Total

$          0.33

$          0.81

$          2.53

$          1.46

Earnings per share attributable to Avient common shareholders - Diluted:

Continuing operations

$          0.32

$          0.81

$          2.51

$          1.46

Discontinued operations

—

—

—

(0.01)

Total

$          0.32

$          0.81

$          2.51

$          1.45

Cash dividends declared per share of common stock

$     0.2375

$     0.2125

$     0.8750

$     0.8200

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

Basic

91.5

91.4

91.4

90.1

Diluted

92.4

92.1

92.1

90.6

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,

2021

2020

2021

2020

Cost of sales:

Restructuring costs, including accelerated depreciation

$         (6.0)

$         (1.8)

$       (14.6)

$         (4.3)

Environmental remediation costs

(0.5)

(1.1)

(22.9)

(20.4)

Reimbursement of previously incurred environmental costs

—

—

4.5

8.7

Acquisition related costs

0.6

1.2

(0.6)

(9.3)

Impact on cost of sales

(5.9)

(1.7)

(33.6)

(25.3)

Selling and administrative expense:

Restructuring, legal and other

(4.2)

(13.0)

(5.9)

(22.5)

Acquisition earn-out adjustments

—

1.5

—

(1.0)

Acquisition related costs

(1.1)

(1.4)

(8.3)

(24.9)

Impact on selling and administrative expense

(5.3)

(12.9)

(14.2)

(48.4)

Impact on operating income

(11.2)

(14.6)

(47.8)

(73.7)

Costs related to committed financing in interest expense, net

—

—

—

(10.1)

Other income, net

—

0.1

0.1

0.4

   Pension settlement/curtailment and mark-to-market adjustment (loss) gain

(9.4)

10.3

(9.4)

17.2

Impact on income from continuing operations before income taxes

(20.6)

(4.2)

(57.1)

(66.2)

Income tax benefit (expense) on above special items

4.1

(1.3)

13.0

14.1

Tax adjustments⁽²⁾

(7.5)

32.2

(5.9)

27.3

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

$       (24.0)

$        26.7

$       (50.0)

$       (24.8)

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

$       (0.26)

$        0.29

$       (0.54)

$       (0.27)

Weighted average shares used to compute adjusted earnings per share:

Diluted

92.4

92.1

92.1

90.6

⁽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,

2021

2020

ASSETS

Current assets:

Cash and cash equivalents

$                             601.2

$                          649.5

Accounts receivable, net

642.3

516.6

Inventories, net

461.1

327.5

Other current assets

128.1

108.5

Total current assets

1,832.7

1,602.1

Property, net

676.1

694.9

Goodwill

1,286.4

1,308.1

Intangible assets, net

925.2

1,008.5

Operating lease assets, net

74.1

80.9

Other non-current assets

208.4

176.0

Total assets

$                         5,002.9

$                       4,870.5

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term and current portion of long-term debt

$                                 8.6

$                            18.6

Accounts payable

553.9

471.7

Current operating lease obligations

24.2

25.1

Accrued expenses and other current liabilities

359.6

285.6

Total current liabilities

946.3

801.0

Non-current liabilities:

Long-term debt

1,850.3

1,854.0

Pension and other post-retirement benefits

100.0

115.0

Deferred income taxes

100.6

140.0

Non-current operating lease obligations

50.1

56.0

Other non-current liabilities

165.1

192.8

Total non-current liabilities

2,266.1

2,357.8

SHAREHOLDERS' EQUITY

Avient shareholders' equity

1,774.7

1,697.1

Noncontrolling interest

15.8

14.6

Total equity

1,790.5

1,711.7

Total liabilities and equity

$                         5,002.9

$                       4,870.5

Attachment 5

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

Year Ended

December 31,

2021

2020

Operating activities

Net income

$              230.6

$              133.4

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

Depreciation and amortization

144.2

111.8

Accelerated depreciation

1.7

3.2

Share-based compensation expense

11.2

11.3

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

Increase in accounts receivable

(143.1)

(4.6)

(Increase) decrease in inventories

(139.5)

40.2

Increase in accounts payable

95.3

78.4

(Decrease) increase in pension and other post-retirement benefits

(10.9)

30.7

Increase in post-acquisition earnout liabilities

—

1.0

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

44.3

(3.7)

Taxes paid on gain on divestiture

—

(142.0)

Payment of post-acquisition date earnout liability

—

(38.1)

Net cash provided by operating activities

233.8

221.6

Investing activities

Capital expenditures

(100.6)

(63.7)

Business acquisitions, net of cash acquired

(47.6)

(1,380.2)

Net proceeds from divestiture

—

7.1

Other investing activities

(2.0)

5.2

Net cash used by investing activities

(150.2)

(1,431.6)

Financing activities

Debt offering proceeds

—

650.0

Purchase of common shares for treasury

(4.2)

(22.4)

Cash dividends paid

(77.7)

(71.3)

Repayment of long-term debt

(18.5)

(7.8)

Payments on withholding tax on share awards

(10.7)

(2.3)

Debt financing costs

—

(9.5)

Equity offering proceeds, net of underwriting discount and issuance costs

—

496.1

Payment of acquisition date earnout liability

—

(50.8)

Other financing activities

(3.5)

—

Net cash (used) provided by financing activities

(114.6)

982.0

Effect of exchange rate changes on cash

(17.3)

12.8

Decrease in cash and cash equivalents

(48.3)

(215.2)

Cash and cash equivalents at beginning of year

649.5

864.7

Cash and cash equivalents at end of year

$              601.2

$              649.5

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,

2021

2020

2021

2020

Sales:

   Color, Additives and Inks

$               581.3

$               525.8

$            2,401.6

$            1,502.9

   Specialty Engineered Materials

228.2

190.6

918.9

708.8

   Distribution

425.0

305.1

1,630.9

1,110.3

   Corporate and eliminations

(33.0)

(24.5)

(132.6)

(79.9)

      Sales

$            1,201.5

$               997.0

$            4,818.8

$            3,242.1

Gross margin:

   Color, Additives and Inks

$               164.5

$               164.3

$               727.5

$               484.4

   Specialty Engineered Materials

60.0

59.1

257.4

207.6

   Distribution

36.5

32.4

155.8

124.0

   Corporate and eliminations

(7.9)

(2.9)

(41.1)

(31.7)

      Gross margin

$               253.1

$               252.9

$            1,099.6

$               784.3

Selling and administrative expense:

   Color, Additives and Inks

$               103.3

$               106.8

$               424.4

$               303.6

   Specialty Engineered Materials

31.2

28.7

125.4

113.2

   Distribution

14.8

14.4

62.6

54.5

   Corporate and eliminations

29.8

38.0

106.0

123.7

      Selling and administrative expense

$               179.1

$               187.9

$               718.4

$               595.0

Operating income:

   Color, Additives and Inks

$                 61.2

$                 57.5

$               303.1

$               180.8

   Specialty Engineered Materials

28.8

30.4

132.0

94.4

   Distribution

21.7

18.0

93.2

69.5

   Corporate and eliminations

(37.7)

(40.9)

(147.1)

(155.4)

      Operating income

$                 74.0

$                 65.0

$               381.2

$               189.3

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

2021

2020

2021

2020

Sales

$   1,201.5

$      997.0

$   4,818.8

$   3,242.1

Gross margin - GAAP

253.1

252.9

1,099.6

784.3

Special items in gross margin (Attachment 3)

5.9

1.7

33.6

25.3

Adjusted Gross margin

$      259.0

$      254.6

$   1,133.2

$      809.6

Adjusted Gross margin as a percent of sales

21.6 %

25.5 %

23.5 %

25.0 %

Operating income - GAAP

74.0

65.0

381.2

189.3

Special items in operating income (Attachment 3)

11.2

14.6

47.8

73.7

Adjusted Operating income

$         85.2

$         79.6

$      429.0

$      263.0

Adjusted Operating income as a percent of sales

7.1 %

8.0 %

8.9 %

8.1 %

The table below reconciles pre-special income tax expense and the pre-special effective tax rate to their most comparable US GAAP figures.

Three Months Ended

December 31,

2021

2020

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special I
tems

Adjusted
Results

Income from continuing operations before income taxes

$  51.1

$     20.6

$   71.7

$   57.4

$         4.2

$   61.6

Income tax (expense) benefit - GAAP

(22.2)

—

(22.2)

17.3

—

17.3

Income tax impact of special items (Attachment 3)

—

(4.1)

(4.1)

—

1.3

1.3

Tax adjustments (Attachment 3)

—

7.5

7.5

—

(32.2)

(32.2)

Income tax (expense) benefit

$ (22.2)

$        3.4

$  (18.8)

$   17.3

$     (30.9)

$  (13.6)

Effective Tax Rate⁽¹⁾

43.4 %

26.0 %

(30.1) %

22.1 %

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

Year Ended

December 31,

2021

2020

GAAP
Results

Special
Items

Adjusted
Results

GAAP
Results

Special
Items

Adjusted
Results

Income from continuing operations before income taxes

$  304.6

$     57.1

$ 361.7

$ 139.0

$       66.2

$ 205.2

Income tax expense - GAAP

(74.0)

—

(74.0)

(5.2)

—

(5.2)

Income tax impact of special items (Attachment 3)

—

(13.0)

(13.0)

—

(14.1)

(14.1)

Tax adjustments (Attachment 3)

—

5.9

5.9

—

(27.3)

(27.3)

Income tax expense

$ (74.0)

$      (7.1)

$  (81.1)

$    (5.2)

$     (41.4)

$  (46.6)

Effective Tax Rate⁽¹⁾

24.3 %

22.4 %

3.7 %

22.7 %

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

The following pro forma adjustments are referenced by management to provide comparable business performance by incorporating the Clariant Color business in periods prior to the acquisition date (July 1, 2020). Financial information referenced here is provided to aid in reconciling back to the most comparable GAAP figures.

Reconciliation of Pro Forma Adjusted Earnings per Share:

Year Ended
December 31, 2020

Net income from continuing operations attributable to Avient shareholders

$                        132.0

Special items, after tax

24.8

Adjusted net income from continuing operations excluding special items

156.8

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

20.7

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

$                        177.5

Weighted average diluted shares

90.6

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

1.5

Pro forma weighted average diluted shares

92.1

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

$                          1.93

Year Ended

December 31, 2020

Sales

$                                3,242.1

Clariant Color 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

Reconciliation of Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) by Segment

Three Months Ended

December 31,

Year Ended

December 31,

2021

2020

2021

2020

Operating income:

   Color, Additives and Inks

$        61.2

$        57.5

$     303.1

$     180.8

   Specialty Engineered Materials

28.8

30.4

132.0

94.4

   Distribution

21.7

18.0

93.2

69.5

   Corporate and eliminations

(37.7)

(40.9)

(147.1)

(155.4)

      Operating income

$        74.0

$        65.0

$     381.2

$     189.3

Items below OI in Corporate:

Other income, net

$        (5.4)

$        11.7

$        (1.3)

$        24.3

Depreciation & amortization:

Color, Additives and Inks

$        26.4

$        27.3

$     105.7

$        75.1

Specialty Engineered Materials

8.0

7.4

31.7

30.0

Distribution

0.2

0.3

0.8

0.7

Corporate and eliminations

3.6

2.8

7.7

9.3

Depreciation & Amortization

$        38.2

$        37.8

$     145.9

$     115.1

EBITDA:

   Color, Additives and Inks

$        87.6

$        84.8

$     408.8

$     255.9

   Specialty Engineered Materials

36.8

37.8

163.7

124.4

   Distribution

21.9

18.3

94.0

70.2

   Corporate and eliminations

(39.5)

(26.4)

(140.7)

(121.8)

      EBITDA

$     106.8

$     114.5

$     525.8

$     328.7

Reconciliation of Pro Forma Sales, Operating Income and EBITDA - Color, Additives and Inks

Year Ended

December 31, 2020

Sales:

   Color, Additives and Inks

$                        1,502.9

   Clariant Color pro forma adjustments⁽²⁾

540.4

      Pro forma sales

$                        2,043.3

Operating income:

   Color, Additives and Inks

$                           180.8

   Clariant Color pro forma adjustments⁽²⁾

45.0

      Pro forma operating income

$                           225.8

Depreciation & amortization:

Color, Additives and Inks

$                             75.1

Clariant Color pro forma adjustments⁽²⁾

30.1

Pro forma depreciation & amortization

$                           105.2

EBITDA:

   Color, Additives and Inks

$                           255.9

   Clariant Color pro forma adjustments⁽²⁾

75.1

      Pro forma EBITDA

$                           331.0

⁽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

December 31,

Year Ended

December 31,

Reconciliation to EBITDA and Pro Forma Adjusted EBITDA:

2021

2020

2021

2020

Net income from continuing operations – GAAP

$           28.9

$           74.7

$         230.6

$       133.8

Income tax expense (benefit)

22.2

(17.3)

74.0

5.2

Interest expense

17.5

19.3

75.3

74.6

Depreciation and amortization from continuing operations

38.2

37.8

145.9

115.1

EBITDA

$         106.8

$         114.5

$         525.8

$       328.7

Special items, before tax

20.6

4.2

57.1

66.2

Interest expense included in special items

—

—

(10.1)

Depreciation and amortization included in special items

(1.6)

(0.7)

(1.7)

(3.2)

Adjusted EBITDA 

$         125.8

$         118.0

$         581.2

$       381.6

Clariant Color pro forma adjustments⁽²⁾

—

—

—

75.1

Pro forma adjusted EBITDA

$         125.8

$         118.0

$         581.2

$       456.7

⁽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

Net Debt Calculation

December 31, 2021

Total long-term debt, net

$                    1,850.3

Unamortized discount and debt issuance cost

14.4

Short-term and current portion of long term debt

8.6

Total debt

$                    1,873.3

Cash

(601.2)

Net debt

$                    1,272.1