- Fourth quarter and full year GAAP EPS from continuing
operations of $(0.19) and
$0.90
- Fourth quarter and full year adjusted EPS from continuing
operations of $0.39 and $2.69 exceeds prior guidance of $0.29 and $2.60 due
to better-than-expected orders for personal protection products
from Avient Protective Materials ("APM") and cost
reductions
- On a pro forma basis, fourth quarter and full year adjusted
EPS of $0.42 and $3.04 exceeded prior guidance of $0.33 and $2.95,
respectively
- Strong working capital performance to finish the year
resulted in cash flow from operations of approximately $400 million for 2022; full year free cash flow
of approximately $290
million
- Paid down additional $200
million of debt for a year-end net debt-to-adjusted EBITDA
of 2.9x which improved from prior projections
- Earned fourth Great Place to Work® certification, achieving
the highest employee engagement scores in the history of the
company
CLEVELAND, Feb. 15,
2023 /PRNewswire/ -- Avient Corporation (NYSE: AVNT),
a leading provider of specialized and sustainable solutions, today
announced its fourth quarter and full year results for 2022. Fourth
quarter and full year GAAP earnings per share (EPS) from continuing
operations were $(0.19) and
$0.90, respectively.
The company noted that GAAP EPS includes special items
(Attachment 3) and intangible amortization expense (Attachment 1).
Special items for the fourth quarter of 2022 had a $(0.42) impact on EPS and included
acquisition-related costs that primarily consist of inventory
step-up adjustments, restructuring costs, debt extinguishment
costs, and a pension market-to-market adjustment.
On a pro forma basis, fourth quarter and full year adjusted EPS
were $0.42 and $3.04, respectively, which excludes special items
and intangible amortization expense, exceeding previous guidance of
$0.33 and $2.95.
"Orders in Europe and
Asia were slightly better than
expected at the end of the year. In addition, demand for composites
including Dyneema applications for personal protection were also
higher," said Robert M. Patterson,
Chairman, President and Chief Executive Officer, Avient
Corporation. "Combined with better margins, our adjusted EPS for
the quarter exceeded our projections by $0.09."
"That being said, versus the prior year, global demand
conditions and inventory destocking negatively impacted nearly
every industry and region during the quarter," Mr. Patterson added.
"We focused on controlling costs and reducing working capital,
generating an additional $90 million
of free cash flow above our previous projections. We used the
incremental cash to pay down debt in December and ended the year
with net debt to adjusted EBITDA leverage of 2.9x, below prior
guidance of 3.1x."
"I'm incredibly proud of the two transformational portfolio
enhancements completed during 2022," Mr. Patterson said. "We
bolstered our composites business with the acquisition of APM and
divested our Distribution segment. We then paid down $950 million of debt, providing us a strong
balance sheet to navigate through this period of macro-economic
uncertainty."
"We have never wavered from our goal of becoming a specialty
formulator. We have overhauled our portfolio by divesting more
cyclical, less specialized businesses and made significant
investments in innovation, composites, sustainable solutions and
our Great Place to Work® culture," Mr. Patterson continued.
"Through these investments, we have significantly increased the
overall earnings and margin profile of the company, which will lead
to long-term value creation."
2023 Outlook
"As we begin 2023, we remain focused on executing our strategy,
including integrating the APM business and being prudent and
proactive in optimizing our cost structure," said Jamie A. Beggs, Senior Vice President and Chief
Financial Officer. "This includes restructuring actions to
accelerate the remaining synergies associated with the Clariant
Color acquisition, particularly in Europe."
Ms. Beggs continued, "In the first quarter, we expect to
experience similar demand conditions as in the fourth quarter of
2022, driven by negative consumer sentiment, rising interest rates
and a slow restart of China. We do
expect conditions to improve in the second half of the year driven
by performance in our key growth drivers, particularly sustainable
solutions and composites. Given these factors we anticipate
full-year sales of $3.45 billion,
adjusted EBITDA of $530 million and
adjusted EPS of $2.40."
Avient will provide additional details on its 2022 fourth
quarter and full year performance and 2023 outlook during its
webcast scheduled for 8:00 a.m. Eastern
Time on February 15, 2023.
Non-GAAP Financial Measures
The Company uses both GAAP (generally accepted accounting
principles) and non-GAAP financial measures. The non-GAAP financial
measures include adjusted EPS, adjusted operating income, adjusted
gross margin and adjusted EBITDA. Avient's chief operating decision
maker uses this financial measure to monitor and evaluate the
ongoing performance of the Company and each business segment and to
allocate resources.
The Company does not provide reconciliations of forward-looking
non-GAAP financial measures, such as adjusted EPS and adjusted
EBITDA, to the most comparable GAAP financial measures on a
forward-looking basis because the Company is unable to provide a
meaningful or accurate calculation or estimation of reconciling
items and the information is not available without unreasonable
effort. This is due to the inherent difficulty of forecasting the
timing and amount of certain items, such as, but not limited to,
restructuring costs, environmental remediation costs, acquisition
related costs, and other non-routine costs. Each of such
adjustments has not yet occurred, are out of the Company's control
and/or cannot be reasonably predicted. For the same reasons, the
Company is unable to address the probable significance of the
unavailable information.
To access Avient's news library online, please visit
www.avient.com/news.
Pro Forma for Acquisition of Avient Protective Materials
business (APM)
On September 1, 2022, the company
acquired DSM's Protective Materials business, the foundation of
which is the renowned technology and globally admired brand of
Dyneema®, the World's Strongest Fiber™. This business is referred
to as Avient Protective Materials "APM".
Comparisons to prior year fourth quarter and full year financial
results herein are presented on a pro forma basis such that the
prior periods include the business results of APM. Management
believes this provides better comparability of the performance of
the combined businesses. Refer to Attachment 7 Reconciliation
of Non-GAAP Financial Measures for details regarding adjustments to
previously reported results to arrive to the pro forma financial
metrics.
Webcast Details
Avient will host a webcast on Wednesday,
February 15, 2023 at 8:00 a.m.
EST. The webcast can be viewed live at
avient.com/investors, or by clicking on the webcast link here.
Conference call participants in the question and answer session
should pre-register using the link at avient.com/investors, or
here, to receive the dial-in numbers and a personal PIN, which are
required to access the conference call. The question and answer
session will follow the company's presentation and prepared
remarks.
A recording of the webcast and the slide presentation will be
available at
avient.com/investors/events-presentations immediately
following the conference call and will be accessible for one
year.
About Avient
Avient Corporation (NYSE: AVNT) provides specialized and
sustainable material solutions that transform customer challenges
into opportunities, bringing new products to life for a better
world. Examples include:
- Dyneema®, the world's strongest fiber™, enables unmatched
levels of performance and protection for end-use applications,
including ballistic personal protection, marine and sustainable
infrastructure and outdoor sports
- Unique technologies that improve the recyclability of products
and enable recycled content to be incorporated, thus advancing a
more circular economy
- Light-weighting solutions that replace heavier traditional
materials like metal, glass and wood, which can improve fuel
efficiency in all modes of transportation and reduce carbon
footprint
- Sustainable infrastructure solutions that increase energy
efficiency, renewable energy, natural resource conservation and
fiber optic / 5G network accessibility
Avient is certified ACC Responsible Care®, a founding member of
the Alliance to End Plastic Waste and certified Great Place to
Work®. For more information, visit https://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, but are not limited to:
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; the current and potential
future impact of the COVID-19 pandemic on our business, results of
operations, financial position or cash flows including, without
limitation, any supply chain and logistics issues; changes in laws
and regulations regarding plastics in jurisdictions where we
conduct business; 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; our
ability to achieve strategic objectives and successfully integrate
acquisitions, including Avient Protective Materials; an inability
to raise or sustain prices for products or services; our ability to
pay regular quarterly cash dividends and the amounts and timing of
any future dividends; information systems failures and
cyberattacks; amounts for cash and non-cash charges related to
restructuring plans that may differ from original estimates,
including because of timing changes associated with the underlying
actions; and other factors affecting our business beyond our
control, including without limitation, changes in the general
economy, changes in interest rates, changes in the rate of
inflation and any recessionary conditions. The above list of
factors is not exhaustive.
Any forward-looking statement speaks only as of the date on
which such statement is made, and 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.
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,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
790.4
|
|
$
807.1
|
|
$
3,396.9
|
|
$
3,315.5
|
Operating
Income
|
|
0.4
|
|
50.2
|
|
243.3
|
|
279.7
|
Net (loss) income from
continuing operations attributable to Avient
shareholders
|
|
(17.0)
|
|
11.2
|
|
82.8
|
|
151.8
|
Diluted (loss) earnings
per share from continuing operations attributable
to Avient shareholders
|
|
$
(0.19)
|
|
$
0.12
|
|
$
0.90
|
|
$
1.65
|
|
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
and
Attachment 7 for a summary of pro forma adjustments
associated with the APM Acquisition.
|
|
|
Three Months
Ended
December
31,
|
|
2022
|
|
2021
|
Reconciliation to
Condensed Consolidated Statements of Income
|
$
|
|
EPS(1)
|
|
$
|
|
EPS(1)
|
|
|
|
|
|
|
|
|
Net (loss) income from
continuing operations attributable to Avient
shareholders
|
$
(17.0)
|
|
$
(0.19)
|
|
$
11.2
|
|
$
0.12
|
Special items, after
tax (Attachment 3)
|
38.3
|
|
0.42
|
|
23.9
|
|
0.26
|
Amortization expense,
after-tax
|
14.6
|
|
0.16
|
|
11.3
|
|
0.12
|
Adjusted net income /
EPS
|
$
35.9
|
|
$
0.39
|
|
$
46.4
|
|
$
0.50
|
|
(1) Per share amounts may not
recalculate from figures presented herein due to
rounding
|
|
|
|
Year
Ended
December
31,
|
|
2022
|
|
2021
|
Reconciliation to
Condensed Consolidated Statements of Income
|
$
|
|
EPS(1)
|
|
$
|
|
EPS(1)
|
|
|
|
|
|
|
|
|
Net income from
continuing operations attributable to Avient
shareholders
|
$
82.8
|
|
$
0.90
|
|
$
151.8
|
|
$
1.65
|
Special items, after
tax (Attachment 3)
|
116.2
|
|
1.26
|
|
50.0
|
|
0.54
|
Amortization expense,
after-tax
|
49.0
|
|
0.53
|
|
44.9
|
|
0.49
|
Adjusted net income /
EPS
|
$
248.0
|
|
$
2.69
|
|
$
246.7
|
|
$
2.68
|
|
(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,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
790.4
|
|
$
807.1
|
|
$
3,396.9
|
|
$
3,315.5
|
Cost of
sales
|
|
618.4
|
|
590.5
|
|
2,514.2
|
|
2,371.7
|
Gross margin
|
|
172.0
|
|
216.6
|
|
882.7
|
|
943.8
|
Selling and
administrative expense
|
|
171.6
|
|
166.4
|
|
639.4
|
|
664.1
|
Operating
income
|
|
0.4
|
|
50.2
|
|
243.3
|
|
279.7
|
Interest expense,
net
|
|
(49.4)
|
|
(17.5)
|
|
(119.8)
|
|
(75.2)
|
Other expense,
net
|
|
(28.4)
|
|
(5.3)
|
|
(59.7)
|
|
(1.0)
|
(Loss) income from
continuing operations before income taxes
|
|
(77.4)
|
|
27.4
|
|
63.8
|
|
203.5
|
Income tax benefit
(expense)
|
|
60.8
|
|
(17.1)
|
|
19.3
|
|
(51.9)
|
Net (loss) income from
continuing operations
|
|
(16.6)
|
|
10.3
|
|
83.1
|
|
151.6
|
Income from
discontinued operations, net of income taxes
|
|
561.5
|
|
18.7
|
|
620.3
|
|
79.0
|
Net income
|
|
544.9
|
|
29.0
|
|
703.4
|
|
230.6
|
Net (income) loss
attributable to noncontrolling interests
|
|
(0.4)
|
|
0.9
|
|
(0.3)
|
|
0.2
|
Net income attributable
to Avient common shareholders
|
|
$
544.5
|
|
$
29.9
|
|
$
703.1
|
|
$
230.8
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Avient common shareholders - Basic:
|
|
|
|
|
Continuing
operations
|
|
$
(0.19)
|
|
$
0.12
|
|
$
0.91
|
|
$
1.66
|
Discontinued
operations
|
|
6.17
|
|
0.21
|
|
6.80
|
|
0.87
|
Total
|
|
$
5.98
|
|
$
0.33
|
|
$
7.71
|
|
$
2.53
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Avient common shareholders - Diluted:
|
|
|
|
|
Continuing
operations
|
|
$
(0.19)
|
|
$
0.12
|
|
$
0.90
|
|
$
1.65
|
Discontinued
operations
|
|
6.17
|
|
0.20
|
|
6.73
|
|
0.86
|
Total
|
|
$
5.98
|
|
$
0.32
|
|
$
7.63
|
|
$
2.51
|
|
|
|
|
|
|
|
|
|
Cash dividends declared
per share of common stock
|
|
$
0.2475
|
|
$
0.2375
|
|
$
0.9600
|
|
$
0.8750
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
used to compute earnings per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
91.0
|
|
91.5
|
|
91.2
|
|
91.4
|
Diluted
|
|
91.0
|
|
92.4
|
|
92.2
|
|
92.1
|
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,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
Restructuring costs,
including accelerated depreciation
|
|
$ (21.3)
|
|
$
(6.0)
|
|
$ (31.1)
|
|
$ (14.6)
|
Environmental
remediation costs
|
|
(0.4)
|
|
(0.5)
|
|
(24.2)
|
|
(22.9)
|
Reimbursement of
previously incurred environmental costs
|
|
—
|
|
—
|
|
8.3
|
|
4.5
|
Acquisition related
costs
|
|
(23.8)
|
|
0.6
|
|
(34.1)
|
|
(0.6)
|
Impact on cost of
sales
|
|
(45.5)
|
|
(5.9)
|
|
(81.1)
|
|
(33.6)
|
|
|
|
|
|
|
|
|
|
Selling and
administrative expense:
|
|
|
|
|
|
|
|
|
Restructuring, legal
and other
|
|
(8.3)
|
|
(4.2)
|
|
(8.3)
|
|
(5.9)
|
Acquisition related
costs
|
|
(6.1)
|
|
(1.1)
|
|
(19.3)
|
|
(8.3)
|
Impact on selling and
administrative expense
|
|
(14.4)
|
|
(5.3)
|
|
(27.6)
|
|
(14.2)
|
|
|
|
|
|
|
|
|
|
Impact on operating
income
|
|
(59.9)
|
|
(11.2)
|
|
(108.7)
|
|
(47.8)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
- committed financing and debt extinguishment
|
|
(16.0)
|
|
—
|
|
(26.0)
|
|
—
|
|
|
|
|
|
|
|
|
|
Mark-to-market on
derivatives
|
|
—
|
|
—
|
|
(30.9)
|
|
—
|
Pension
and post retirement mark-to-market adjustment and other
|
|
(28.4)
|
|
(9.3)
|
|
(28.4)
|
|
(9.3)
|
Impact on Other
expense, net
|
|
(28.4)
|
|
(9.3)
|
|
(59.3)
|
|
(9.3)
|
|
|
|
|
|
|
|
|
|
Impact on income from
continuing operations before income taxes
|
|
(104.3)
|
|
(20.5)
|
|
(194.0)
|
|
(57.1)
|
Income tax benefit
benefit/(expense) on above special items
|
|
26.8
|
|
4.1
|
|
49.4
|
|
13.0
|
Tax
adjustments(2)
|
|
39.2
|
|
(7.5)
|
|
28.4
|
|
(5.9)
|
Impact of special
items on net income from continuing operations
|
|
$ (38.3)
|
|
$ (23.9)
|
|
$
(116.2)
|
|
$ (50.0)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share impact
|
|
$ (0.42)
|
|
$ (0.26)
|
|
$ (1.26)
|
|
$ (0.54)
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used to compute adjusted earnings per share:
|
|
|
|
|
|
|
|
|
Diluted
|
|
91.7
|
|
92.4
|
|
92.2
|
|
92.1
|
|
|
(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 non-recurring 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,
|
|
|
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
641.1
|
|
$
601.2
|
Accounts receivable,
net
|
|
|
|
440.6
|
|
439.9
|
Inventories,
net
|
|
|
|
372.7
|
|
305.8
|
Current assets held for
sale
|
|
|
|
—
|
|
360.2
|
Other current
assets
|
|
|
|
115.3
|
|
119.9
|
Total current
assets
|
|
|
|
1,569.7
|
|
1,827.0
|
Property,
net
|
|
|
|
1,049.2
|
|
672.3
|
Goodwill
|
|
|
|
1,671.9
|
|
1,284.8
|
Intangible assets,
net
|
|
|
|
1,597.6
|
|
925.2
|
Operating lease assets,
net
|
|
|
|
60.4
|
|
58.2
|
Non-current assets held
for sale
|
|
|
|
—
|
|
22.0
|
Other non-current
assets
|
|
|
|
136.2
|
|
207.7
|
Total
assets
|
|
|
|
$
6,085.0
|
|
$
4,997.2
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Short-term and current
portion of long-term debt
|
|
|
|
$
2.2
|
|
$
8.6
|
Accounts
payable
|
|
|
|
454.4
|
|
429.5
|
Current operating lease
obligations
|
|
|
|
17.0
|
|
21.1
|
Current liabilities
held for sale
|
|
|
|
—
|
|
141.3
|
Accrued expenses and
other current liabilities
|
|
|
|
395.8
|
|
340.2
|
Total current
liabilities
|
|
|
|
869.4
|
|
940.7
|
Non-current
liabilities:
|
|
|
|
|
|
|
Long-term
debt
|
|
|
|
2,176.7
|
|
1,850.3
|
Pension and other
post-retirement benefits
|
|
|
|
67.2
|
|
99.9
|
Deferred income
taxes
|
|
|
|
342.5
|
|
100.6
|
Non-current operating
lease obligations
|
|
|
|
40.9
|
|
37.3
|
Non-current liabilities
held for sale
|
|
|
|
—
|
|
13.1
|
Other non-current
liabilities
|
|
|
|
235.5
|
|
164.8
|
Total non-current
liabilities
|
|
|
|
2,862.8
|
|
2,266.0
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
Avient shareholders'
equity
|
|
|
|
2,334.5
|
|
1,774.7
|
Noncontrolling
interest
|
|
|
|
18.3
|
|
15.8
|
Total
equity
|
|
|
|
2,352.8
|
|
1,790.5
|
Total liabilities
and equity
|
|
|
|
$
6,085.0
|
|
$
4,997.2
|
Attachment
5
|
Avient
Corporation
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
millions)
|
|
|
|
Year
Ended
December
31,
|
|
|
2022
|
|
2021
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
703.4
|
|
$
230.6
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Gain on sale of
business, net of tax expense
|
|
(550.1)
|
|
—
|
Depreciation and
amortization
|
|
157.6
|
|
144.2
|
Accelerated
depreciation
|
|
5.5
|
|
1.7
|
Amortization of
inventory step-up
|
|
34.4
|
|
1.5
|
Deferred income tax
expense (benefit)
|
|
0.5
|
|
(27.3)
|
Share-based
compensation expense
|
|
13.2
|
|
11.2
|
Changes in assets and
liabilities, net of the effect of acquisitions:
|
|
|
|
|
Decrease (increase) in
accounts receivable
|
|
32.6
|
|
(143.1)
|
Decrease (increase) in
inventories
|
|
14.0
|
|
(141.0)
|
Increase in accounts
payable
|
|
10.7
|
|
95.3
|
Increase (decrease) in
pension and other post-retirement benefits
|
|
7.1
|
|
(10.9)
|
Taxes paid on gain on
divestiture
|
|
(2.8)
|
|
—
|
(Decrease) increase in
accrued expenses and other assets and liabilities, net
|
|
(27.7)
|
|
71.6
|
Net cash provided by
operating activities
|
|
398.4
|
|
233.8
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(105.5)
|
|
(100.6)
|
Business acquisitions,
net of cash acquired
|
|
(1,426.1)
|
|
(47.6)
|
Settlement of foreign
exchange derivatives
|
|
93.3
|
|
—
|
Proceeds from
divestiture
|
|
928.2
|
|
—
|
Other investing
activities
|
|
6.1
|
|
(2.0)
|
Net cash used by
investing activities
|
|
(504.0)
|
|
(150.2)
|
Financing
activities
|
|
|
|
|
Debt offering
proceeds
|
|
1,300.0
|
|
—
|
Purchase of common
shares for treasury
|
|
(36.4)
|
|
(4.2)
|
Cash dividends
paid
|
|
(86.8)
|
|
(77.7)
|
Repayment of long-term
debt
|
|
(956.8)
|
|
(18.5)
|
Payments on withholding
tax on share awards
|
|
(4.3)
|
|
(10.7)
|
Debt financing
costs
|
|
(49.3)
|
|
—
|
Other financing
activities
|
|
—
|
|
(3.5)
|
Net cash provided
(used) by financing activities
|
|
166.4
|
|
(114.6)
|
Effect of exchange rate
changes on cash
|
|
(20.9)
|
|
(17.3)
|
Increase (decrease) in
cash and cash equivalents
|
|
39.9
|
|
(48.3)
|
Cash and cash
equivalents at beginning of year
|
|
601.2
|
|
649.5
|
Cash and cash
equivalents at end of year
|
|
$
641.1
|
|
$
601.2
|
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Sales:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
490.8
|
|
$
581.3
|
|
$
2,355.0
|
|
$
2,401.6
|
Specialty
Engineered Materials
|
300.8
|
|
226.3
|
|
1,044.4
|
|
911.6
|
Corporate
|
(1.2)
|
|
(0.5)
|
|
(2.5)
|
|
2.3
|
Sales
|
$
790.4
|
|
$
807.1
|
|
$
3,396.9
|
|
$
3,315.5
|
|
|
|
|
|
|
|
|
Gross
margin:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
134.5
|
|
$
164.5
|
|
$
681.3
|
|
$
727.5
|
Specialty
Engineered Materials
|
82.4
|
|
58.3
|
|
283.7
|
|
250.9
|
Corporate
|
(44.9)
|
|
(6.2)
|
|
(82.3)
|
|
(34.6)
|
Gross
margin
|
$
172.0
|
|
$
216.6
|
|
$
882.7
|
|
$
943.8
|
|
|
|
|
|
|
|
|
Selling and
administrative expense:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
90.2
|
|
$
103.3
|
|
$
380.3
|
|
$
424.4
|
Specialty
Engineered Materials
|
47.2
|
|
31.2
|
|
143.6
|
|
125.4
|
Corporate
|
34.2
|
|
31.9
|
|
115.5
|
|
114.3
|
Selling and
administrative expense
|
$
171.6
|
|
$
166.4
|
|
$
639.4
|
|
$
664.1
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
Color,
Additives and Inks
|
$
44.3
|
|
$
61.2
|
|
$
301.0
|
|
$
303.1
|
Specialty
Engineered Materials
|
35.2
|
|
27.1
|
|
140.1
|
|
125.5
|
Corporate
|
(79.1)
|
|
(38.1)
|
|
(197.8)
|
|
(148.9)
|
Operating
income
|
$
0.4
|
|
$
50.2
|
|
$
243.3
|
|
$
279.7
|
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
December 31,
|
|
Year
Ended
December
31,
|
Reconciliation to
Consolidated Statements of Income
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
|
|
|
|
|
|
Sales
|
$ 790.4
|
|
$ 807.1
|
|
$
3,396.9
|
|
$
3,315.5
|
|
|
|
|
|
|
|
|
Gross margin -
GAAP
|
172.0
|
|
216.6
|
|
882.7
|
|
943.8
|
Special items in gross
margin (Attachment 3)
|
45.5
|
|
5.9
|
|
81.1
|
|
33.6
|
Adjusted Gross
margin
|
$ 217.5
|
|
$ 222.5
|
|
$ 963.8
|
|
$ 977.4
|
|
|
|
|
|
|
|
|
Adjusted Gross margin
as a percent of sales
|
27.5 %
|
|
27.6 %
|
|
28.4 %
|
|
29.5 %
|
|
|
|
|
|
|
|
|
Operating income -
GAAP
|
0.4
|
|
50.2
|
|
243.3
|
|
279.7
|
Special items in
operating income (Attachment 3)
|
59.9
|
|
11.2
|
|
108.7
|
|
47.8
|
Adjusted Operating
income
|
$
60.3
|
|
$
61.4
|
|
$ 352.0
|
|
$ 327.5
|
|
|
|
|
|
|
|
|
Adjusted Operating
income as a percent of sales
|
7.6 %
|
|
7.6 %
|
|
10.4 %
|
|
9.9 %
|
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,
|
|
2022
|
|
2021
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
continuing operations before income
taxes
|
$
(77.4)
|
|
$
104.3
|
|
$
26.9
|
|
$
27.4
|
|
$ 20.5
|
|
$
47.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense) - GAAP
|
60.8
|
|
—
|
|
60.8
|
|
(17.1)
|
|
—
|
|
(17.1)
|
Income tax impact of
special items (Attachment 3)
|
—
|
|
(26.8)
|
|
(26.8)
|
|
—
|
|
(4.1)
|
|
(4.1)
|
Tax adjustments
(Attachment 3)
|
—
|
|
(39.2)
|
|
(39.2)
|
|
—
|
|
7.5
|
|
7.5
|
Income tax benefit
(expense)
|
$ 60.8
|
|
$
(66.0)
|
|
$
(5.2)
|
|
$ (17.1)
|
|
$
3.4
|
|
$ (13.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate(1)
|
78.5 %
|
|
|
|
19.6 %
|
|
62.4 %
|
|
|
|
28.6 %
|
|
(1) Rates may not recalculate from
figures presented herein due to rounding
|
|
|
|
Year
Ended
December
31,
|
|
2022
|
|
2021
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
GAAP
Results
|
|
Special
Items
|
|
Adjusted
Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations before income
taxes
|
$ 63.8
|
|
$
194.0
|
|
$ 257.8
|
|
$ 203.5
|
|
$ 57.1
|
|
$ 260.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense) - GAAP
|
19.3
|
|
—
|
|
19.3
|
|
(51.9)
|
|
—
|
|
(51.9)
|
Income tax impact of
special items (Attachment 3)
|
—
|
|
(49.4)
|
|
(49.4)
|
|
—
|
|
(13.0)
|
|
(13.0)
|
Tax adjustments
(Attachment 3)
|
—
|
|
(28.4)
|
|
(28.4)
|
|
—
|
|
5.9
|
|
5.9
|
Income tax
expense
|
$ 19.3
|
|
$
(77.8)
|
|
$ (58.5)
|
|
$ (51.9)
|
|
$
(7.1)
|
|
$ (59.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective Tax
Rate(1)
|
(30.2) %
|
|
|
|
22.7 %
|
|
25.5 %
|
|
|
|
22.7 %
|
|
(1) Rates may not recalculate from
figures presented herein due to rounding
|
|
|
Three Months
Ended
|
|
Year
Ended
|
Reconciliation of
Pro Forma Adjusted Earnings per Share
|
|
December 31,
2022
|
Net (loss) income from
continuing operations attributable to Avient
shareholders
|
|
$
(17.0)
|
|
$
82.8
|
Special items, after
tax (Attachment 3)
|
|
38.3
|
|
116.2
|
Amortization expense,
after-tax (Attachment 1)
|
|
14.6
|
|
49.0
|
Adjusted net income
from continuing operations excluding special items
|
|
35.9
|
|
248.0
|
APM pro forma
adjustments to net income from continuing operations*
|
|
2.5
|
|
13.6
|
APM amortization
expense, after tax*
|
|
—
|
|
19.1
|
Pro forma adjusted net
income from continuing operations attributable to Avient
shareholders
|
|
$
38.4
|
|
$
280.7
|
|
|
|
|
|
Weighted average
diluted shares
|
|
91.7
|
|
92.2
|
|
|
|
|
|
Pro forma adjusted EPS
- excluding special items
|
|
$
0.42
|
|
$
3.04
|
|
* Pro forma
adjustment for January - August 2022 APM results (period before
Avient ownership) including the impacts of debt
financing and prepayments on net income from continuing
operations.
|
Reconciliation of
Pro Forma Net Debt
|
|
|
December 31,
2022
|
Short-term and current
portion of long term debt
|
|
|
$
2.2
|
Total long-term debt,
net
|
|
|
2,176.7
|
Unamortized discount
and debt issuance cost
|
|
|
37.4
|
Total debt
|
|
|
$
2,216.3
|
Cash
|
|
|
(641.1)
|
Net taxes due from sale
of business
|
|
|
105.0
|
Adjusted
cash
|
|
|
$
(536.1)
|
|
|
|
|
Net debt
|
|
|
$
1,680.2
|
|
|
Free Cash Flow
Calculation
|
|
|
December 31,
2022
|
Cash provided by
operating activities
|
|
|
398.4
|
Capital
expenditures
|
|
|
(105.5)
|
Free cash
flow
|
|
|
$
292.9
|
|
|
Reconciliation to
EBITDA and Adjusted EBITDA
|
|
|
Year
Ended
December 31,
2022
|
Net (loss) income from
continuing operations – GAAP
|
|
|
$
83.1
|
Income tax (benefit)
expense
|
|
|
(19.3)
|
Interest
expense
|
|
|
119.8
|
Depreciation and
amortization from continuing operations
|
|
|
162.5
|
EBITDA
|
|
|
$
346.1
|
Special items, before
income tax
|
|
|
194.0
|
Interest expense
included in special items
|
|
|
(26.0)
|
Depreciation and
amortization included in special items
|
|
|
(5.5)
|
APM pro forma
adjustments - 8 months 2022*
|
|
|
83.1
|
Adjusted
EBITDA
|
|
|
$
591.7
|
|
* Pro forma
adjustment for January - August 2022 APM results (period before
Avient ownership).
|
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SOURCE Avient Corporation