avnt-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________

FORM 10-Q

________________________________________________

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number 1-16091

________________________________________________

AVIENT CORPORATION

(Exact name of registrant as specified in its charter)

________________________________________________


Ohio									34-1730488
(State or other jurisdiction									(I.R.S. Employer Identification No.)
of incorporation or organization)


33587 Walker Road									44012
Avon Lake, Ohio
(Address of principal executive offices)									(Zip Code)

Registrant’s telephone number, including area code: (440) 930-1000

Former name, former address and former fiscal year, if changed since last report: Not Applicable

_______________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $.01 per share	AVNT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of the registrant’s outstanding common shares, par value $.01 per share, as of June 30, 2024 was 91,312,725.

AVIENT CORPORATION

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Sales	$	849.7	$	824.4	$	1,678.7	$	1,670.1
Cost of sales	592.1		583.7		1,142.9		1,181.8
Gross margin	257.6		240.7		535.8		488.3
Selling and administrative expense	185.1		178.4		369.3		368.9

Operating income	72.5		62.3		166.5		119.4
Interest expense, net	(26.6)		(29.4)		(53.2)		(58.2)

Other (expense) income, net	(0.9)		(0.2)		(1.8)		0.5
Income from continuing operations before income taxes	45.0		32.7		111.5		61.7
Income tax expense	(11.2)		(10.4)		(28.0)		(18.1)
Net income from continuing operations	33.8		22.3		83.5		43.6
Loss from discontinued operations, net of income taxes	—		—		—		(0.9)
Net income	$	33.8	$	22.3	$	83.5	$	42.7
Net income attributable to noncontrolling interests	(0.2)		(0.2)		(0.5)		(0.7)
Net income attributable to Avient common shareholders	$	33.6	$	22.1	$	83.0	$	42.0

Earnings (loss) per share attributable to Avient common shareholders - Basic
Continuing operations	$	0.37	$	0.24	$	0.91	$	0.47
Discontinued operations	—		—		—		(0.01)
Total	$	0.37	$	0.24	$	0.91	$	0.46

Earnings (loss) per share attributable to Avient common shareholders - Diluted
Continuing operations	$	0.36	$	0.24	$	0.90	$	0.47
Discontinued operations	—		—		—		(0.01)
Total	$	0.36	$	0.24	$	0.90	$	0.46

Weighted-average shares used to compute earnings per common share:
Basic	91.3		91.1		91.3		91.1
Dilutive impact of share-based compensation	0.9		0.8		0.7		0.8
Diluted	92.2		91.9		92.0		91.9

Anti-dilutive shares not included in diluted common shares outstanding	0.4		0.5		1.1		0.6

Cash dividends declared per share of common stock	$	0.2575	$	0.2475	$	0.5150	$	0.4950

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

1 AVIENT CORPORATION

Avient Corporation

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	33.8	$	22.3	$	83.5	$	42.7
Other comprehensive (loss) income, net of tax:
Translation adjustments and related hedging instruments	(18.5)		(16.3)		(44.4)		1.3

Other	—		(1.6)		—		(3.1)
Total other comprehensive loss	(18.5)		(17.9)		(44.4)		(1.8)
Total comprehensive income	15.3		4.4		39.1		40.9
Comprehensive income attributable to noncontrolling interests	(0.2)		(0.2)		(0.5)		(0.7)
Comprehensive income attributable to Avient common shareholders	$	15.1	$	4.2	$	38.6	$	40.2

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 AVIENT CORPORATION

Avient Corporation

Condensed Consolidated Balance Sheets

(In millions)


	(Unaudited) June 30, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	489.4	$	545.8
Accounts receivable, net	486.6		399.9
Inventories, net	365.9		347.0

Other current assets	117.2		114.9
Total current assets	1,459.1		1,407.6
Property, net	1,019.9		1,028.9
Goodwill	1,685.1		1,719.3
Intangible assets, net	1,515.7		1,590.8


Other non-current assets	228.0		221.9
Total assets	$	5,907.8	$	5,968.5

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion of long-term debt	$	657.7	$	9.5
Accounts payable	435.2		432.3


Accrued expenses and other current liabilities	405.3		331.8
Total current liabilities	1,498.2		773.6
Non-current liabilities:
Long-term debt	1,420.8		2,070.5
Pension and other post-retirement benefits	63.3		67.2
Deferred income taxes	276.3		281.6


Other non-current liabilities	315.0		437.6
Total non-current liabilities	2,075.4		2,856.9

SHAREHOLDERS' EQUITY
Avient shareholders’ equity	2,317.5		2,319.2
Noncontrolling interest	16.7		18.8
Total equity	2,334.2		2,338.0
Total liabilities and equity	$	5,907.8	$	5,968.5

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

3 AVIENT CORPORATION

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)


	Six Months Ended June 30,
	2024		2023
Operating activities
Net income	$	83.5	$	42.7
Adjustments to reconcile net income to net cash provided (used) by operating activities:

Depreciation and amortization	88.4		96.2
Accelerated depreciation	0.8		1.9




Share-based compensation expense	9.0		6.5


Changes in assets and liabilities:
Increase in accounts receivable	(97.0)		(66.6)
(Increase) decrease in inventories	(27.3)		14.0
Increase (decrease) in accounts payable	11.9		(26.2)




Taxes paid on gain on sale of business	—		(103.0)
Accrued expenses and other assets and liabilities, net	(6.2)		9.8

Net cash provided (used) by operating activities	63.1		(24.7)

Investing activities
Capital expenditures	(55.8)		(45.9)


Net proceeds from divestiture	—		7.3
Proceeds from plant closures	3.4		—
Other investing activities	(2.1)		—
Net cash used by investing activities	(54.5)		(38.6)

Financing activities




Cash dividends paid	(47.0)		(45.0)

Repayment of long-term debt	(4.5)		(1.0)




Other financing activities	(3.3)		(2.3)
Net cash used by financing activities	(54.8)		(48.3)
Effect of exchange rate changes on cash	(10.2)		(0.8)
Decrease in cash and cash equivalents	(56.4)		(112.4)
Cash and cash equivalents at beginning of year	545.8		641.1
Cash and cash equivalents at end of period	$	489.4	$	528.7

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

4 AVIENT CORPORATION

Avient Corporation

Consolidated Statements of Shareholders' Equity (Unaudited)

(In millions)


	Common Shares		Shareholders’ Equity
	Common Shares	Common Shares Held in Treasury	Common Shares		Additional Paid-in Capital		Retained Earnings		Common Shares Held in Treasury		Accumulated Other Comprehensive (Loss) Income		Total Avient Shareholders' Equity		Non-controlling Interests		Total Equity
Balance at January 1, 2024	122.2	(31.0)	$	1.2	$	1,529.7	$	1,808.2	$	(932.5)	$	(87.4)	$	2,319.2	$	18.8	$	2,338.0
Net income	—	—	—		—		49.4		—		—		49.4		0.3		49.7
Other comprehensive loss	—	—	—		—		—		—		(25.9)		(25.9)		—		(25.9)
Noncontrolling interest activity	—	—	—		0.3				—		—		0.3		(2.6)		(2.3)
Cash dividends declared -- $0.2575 per share	—	—	—		—		(23.5)		—		—		(23.5)		—		(23.5)


Share-based compensation and exercise of awards	—	0.1	—		0.9		—		0.9		—		1.8		—		1.8

Balance at March 31, 2024	122.2	(30.9)	$	1.2	$	1,530.9	$	1,834.1	$	(931.6)	$	(113.3)	$	2,321.3	$	16.5	$	2,337.8
Net income	—	—	—		—		33.6		—		—		33.6		0.2		33.8
Other comprehensive loss	—	—	—		—		—		—		(18.5)		(18.5)		—		(18.5)

Cash dividends declared -- $0.2575 per share	—	—	—		—		(23.5)		—		—		(23.5)		—		(23.5)


Share-based compensation and exercise of awards	—	—	—		3.9		—		0.7		—		4.6		—		4.6

Balance at June 30, 2024	122.2	(30.9)	$	1.2	$	1,534.8	$	1,844.2	$	(930.9)	$	(131.8)	$	2,317.5	$	16.7	$	2,334.2


	Common Shares		Shareholders’ Equity
	Common Shares	Common Shares Held in Treasury	Common Shares		Additional Paid-in Capital		Retained Earnings		Common Shares Held in Treasury		Accumulated Other Comprehensive (Loss) Income		Total Avient Shareholders' Equity		Non-controlling Interests		Total Equity
Balance at January 1, 2023	122.2	(31.3)	$	1.2	$	1,520.5	$	1,823.6	$	(935.0)	$	(75.8)	$	2,334.5	$	18.3	$	2,352.8
Net income	—	—	—		—		19.9		—		—		19.9		0.5		20.4
Other comprehensive income	—	—	—		—		—		—		16.1		16.1		—		16.1

Cash dividends declared -- $0.2475 per share	—	—	—		—		(22.5)		—		—		(22.5)		—		(22.5)


Share-based compensation and exercise of awards	—	—	—		0.5		—		1.4		—		1.9		—		1.9

Balance at March 31, 2023	122.2	(31.3)	$	1.2	$	1,521.0	$	1,820.9	$	(933.6)	$	(59.7)	$	2,349.8	$	18.8	$	2,368.6
Net income	—	—	—		—		22.1		—		—		22.1		0.2		22.3
Other comprehensive loss	—	—	—		—		—		—		(17.9)		(17.9)		—		(17.9)

Cash dividends declared -- $0.2475 per share	—	—	—		—		(22.5)		—		—		(22.5)		—		(22.5)

Share-based compensation and exercise of awards	—	—	—		3.1		—		0.1		—		3.2		—		3.2

Balance at June 30, 2023	122.2	(31.3)	$	1.2	$	1,524.1	$	1,820.5	$	(933.5)	$	(77.6)	$	2,334.7	$	19.0	$	2,353.7

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

5 AVIENT CORPORATION

Avient Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal, recurring and necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2023 of Avient Corporation. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation and its consolidated subsidiaries.

Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2024.

Note 2 — GOODWILL AND INTANGIBLE ASSETS

Goodwill as of June 30, 2024 and December 31, 2023 and changes in the carrying amount of goodwill by segment were as follows:


(In millions)	Specialty Engineered Materials		Color, Additives and Inks		Total
Balance at December 31, 2023	$	682.5	$	1,036.8	$	1,719.3

Currency translation	(15.2)		(19.0)		(34.2)
Balance at June 30, 2024	$	667.3	$	1,017.8	$	1,685.1

Indefinite and finite-lived intangible assets consisted of the following:


	As of June 30, 2024
(In millions)	Acquisition Cost		Accumulated Amortization		Currency Translation		Net
Customer relationships	$	726.2	$	(217.6)	$	8.3	$	516.9
Patents, technology and other	841.8		(234.4)		6.6		614.0
Indefinite-lived trade names	368.0		—		16.8		384.8
Total	$	1,936.0	$	(452.0)	$	31.7	$	1,515.7


	As of December 31, 2023
(In millions)	Acquisition Cost		Accumulated Amortization		Currency Translation		Net
Customer relationships	$	726.2	$	(199.8)	$	20.0	$	546.4
Patents, technology and other	841.8		(213.1)		22.5		651.2
Indefinite-lived trade names	368.0		—		25.2		393.2
Total	$	1,936.0	$	(412.9)	$	67.7	$	1,590.8

Note 3 — EMPLOYEE SEPARATION AND RESTRUCTURING COSTS

We are engaged in a restructuring program associated with our integration of Clariant Color. These actions are expected to enable us to better serve customers, improve efficiency and deliver cost savings. We expect that the full restructuring plan will be implemented by the end of 2025 and anticipate that we will incur approximately $75.0 million of charges in connection with the restructuring plan. As of June 30, 2024, $58.6 million had been incurred.

6 AVIENT CORPORATION

A summary of the Clariant Color integration restructuring is shown below:


(in millions)	Workforce reductions		Plant closing and other		Total
Balance at January 1, 2023	$	34.3	$	2.4	$	36.7
Restructuring charges	6.9		1.2		8.1
Payments, utilization and translation	(10.9)		(2.8)		(13.7)
Balance at December 31, 2023	$	30.3	$	0.8	$	31.1



Restructuring charges	(2.6)		0.9		(1.7)
Payments, utilization and translation	(5.0)		(0.9)		(5.9)
Balance at June 30, 2024	$	22.7	$	0.8	$	23.5

Note 4 — INVENTORIES, NET

Components of Inventories, net are as follows:


(In millions)	As of June 30, 2024		As of December 31, 2023
Finished products	$	160.0	$	166.0
Work in process	23.3		19.8
Raw materials and supplies	182.6		161.2
Inventories, net	$	365.9	$	347.0

Note 5 — PROPERTY, NET

Components of Property, net are as follows:


(In millions)	As of June 30, 2024		As of December 31, 2023
Land and land improvements	$	94.6	$	98.5
Buildings	433.9		439.8
Machinery and equipment	1,392.6		1,381.1
Property, gross	1,921.1		1,919.4
Less accumulated depreciation	(901.2)		(890.5)
Property, net	$	1,019.9	$	1,028.9

Note 6 — INCOME TAXES

During the three and six months ended June 30, 2024, the Company’s effective tax rate of 24.9% and 25.1%, respectively, was above the U.S. federal statutory rate of 21.0% primarily due to foreign withholding tax, tax on global intangible low-taxed income (GILTI), and non-deductible costs. These unfavorable items were partially offset by U.S. research and development credits, a decrease in valuation allowances, and favorable impacts of other foreign tax items.

During the three and six months ended June 30, 2023, the Company's effective tax rate of 31.8% and 29.3%, respectively, was above the U.S. federal statutory rate of 21.0% primarily due to foreign withholding tax, tax on GILTI, non-deductible items and an increase in foreign valuation allowances. These unfavorable items were partially offset by U.S. research and development credits and favorable impacts of other foreign tax items.

7 AVIENT CORPORATION

Note 7 — FINANCING ARRANGEMENTS

Debt consists of the following instruments:


As of June 30, 2024 (in millions)	Principal Amount		Unamortized discount and debt issuance cost		Net Debt		Weighted average interest rate
Senior secured revolving credit facility due 2026	$	—	$	—	$	—	—	%
Senior secured term loan due 2029	724.3		17.3		707.0		7.34	%
5.75% senior notes due 2025	650.0		1.8		648.2		5.75	%
7.125% senior notes due 2030	725.0		8.1		716.9		7.125	%
Other Debt	6.4		—		6.4
Total Debt	2,105.7		27.2		2,078.5
Less short-term and current portion of long-term debt	659.5		1.8		657.7
Total long-term debt, net of current portion	$	1,446.2	$