Avient Corporation · NYSE:AVNT

Avient — Fermium and Wells Fargo Conferences 2022

58 slides from Avient's conference presentation, May 2022

  1. Slide 1: Avient Corporation Investor Meetings

    AVIENT CORPORATION INVESTOR MEETINGS (NYSE: AVNT) M AY 2 0 2 2

  2. Slide 2: Disclaimer

    DISCLAIMER Forward-Looking Statements In this presentation, 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 expectat

  3. Slide 3: Avient: Who We Are

    AVIENT: WHO WE ARE Headquartered in Avon Lake, OH Key Financial Data (Cleveland) 2022E Sales $5.1 billion 8,700+ employees 100+ manufacturing plants 2022E EBITDA $635 million 2022E EPS $3.50 34 38 21 25,000+ 9 CUSTOMERS >70% of sales • U.S. and Canada • Latin America • Europe, Middle East & Africa •

  4. Slide 4: Who We Are – Vision, Strategy, Culture

    W H O W E A R E – V I S I O N , S T R AT E G Y, C U LT U R E Avient Corporation (NYSE: AVNT) provides OUR VISION specialized and sustainable material solutions that At Avient, we create specialized and sustainable material solutions that transform transform customer challenges into opportunities, cu

  5. Slide 5: What We Do: Materials Science

    W H AT W E D O : M AT E R I A L S C I E N C E Innovation is the lifeblood of a specialty company. We create specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world. We partner with Brand Owners / OEMs, pro

  6. Slide 6: Sustainability for a Better Tomorrow

    SUSTAINABILITY FOR A BETTER TOMORROW Revenue From Sustainable Solutions* 2016-2021 ($ in millions) $310 205 140 80 75 45 40 20 2021 Sales $915M *Avient Sustainable Solutions definitions aligned with FTC 2012 Guide for the Use of Environmental Marketing Claims (“Green Guides”) **2020 is Pro Forma to

  7. Slide 7: Avient ESG Ratings

    AVIENT ESG RATINGS ISS March 2022 ESG Scores SCORE (1 = Best, 10 = Worst) Environmental 2 Social 1 Governance 4 Sustainalytics 2021 ESG Risk Ranking RANK PERCENTILE (1st = lowest risk) (1st – lowest risk) Chemicals INDUSTRY 75/449 17th Specialty Chemicals SUBINDUSTRY 21/124 17th 7

  8. Slide 8: First Quarter 2022 Results

    FIRST QUARTER 2022 R E S U LT S

  9. Slide 9: Q1 2022 Performance

    Q1 2022 PERFORMANCE ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 11% + 11% + 11% (+ 14% excluding FX) (+ 15% excluding FX) (+ 16% excluding FX) $136 $1,294 $0.99 $123 $1,162 $0.89 2021 2022 2021 2022 2021 2022 (in millions) (in millions) 9

  10. Slide 10: Q1 2022 Segment Performance

    Q1 2022 SEGMENT PERFORMANCE CAI SEM Distribution ($ in millions) + 7% + 7% + 13% + 18% (+ 10% excluding FX) (+ 11% excluding FX) (+ 17% excluding FX) (+ 20% excluding FX) + 19% Flat $650 $95 $245 $40 $433 $89 $217 $609 $24 $24 $34 $363 Sales Operating Income Sales Operating Income Sales Operating In

  11. Slide 11: Q1 2022 Sales and Operating Income

    Q1 2022 SALES AND OPERATING INCOME ( T O TA L C O M PA N Y ) Adjusted Sales Growth Rate Operating $ millions Income Q1 2021 $1,162 $123 Sustainable Solutions 19 8% 7 Healthcare 32 21% 6 Composites (excl. Outdoor High Performance) 8 18% 3 Growth in Asia / LATAM 6 3% 2 Other 100 19% 5 Sub-total $1,327

  12. Slide 12: Q1 EBITDA Bridge

    Q1 EBITDA BRIDGE Adjusted $ millions EBITDA Q1 2021 $ 161 China Lockdowns / Russia Impact $ (7) Demand (23) Transportation (7) CAI: Outdoor High Performance (3) Price / Mix 77 Inflation (54)  SEM: Price increases more than Price / Mix Inflation 41 (26)  offset raw material and Distribution: supply

  13. Slide 13: Q1 EPS Bridge

    Q1 EPS BRIDGE Q1 2021 - Adjusted EPS $ 0.89 CAI 0.08 Specialty Engineered Materials 0.06 Distribution 0.00 Corporate Costs 0.02 F/X (0.04) Segment OI 0.12 Tax Rate (0.02) Q1 2022 - Adjusted EPS $ 0.99 13

  14. Slide 14: 2022 Outlook

    2022 OUTLOOK

  15. Slide 15: Revenue Growth Drivers

    REVENUE GROWTH DRIVERS Long-Term 2022E Growth Drivers Growth Rate Growth Rate Sustainable Solutions 8–12% 12% Healthcare 8–10% 10% Composites 10% 5% Excluding Outdoor High Performance 20% Asia / LATAM 5% 5% Other (GDP growth) 2–3% 2–3% Avient 6.5% 6% (8% excl. FX) 15

  16. Slide 16: FY 2022 Performance

    FY 2022 PERFORMANCE ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 6% + 14% + 15% (+ 8% excluding FX) (+ 17% excluding FX) (+ 18% excluding FX) $490 $3.50 $5,100 $4,819 $429 $3.05 2021 2022E 2021 2022E 2021 2022E (in millions) (in millions) 16

  17. Slide 17: Cash Flow / Leverage

    CAS H F LOW / L E VE RAGE ($ millions) 2022E Cash Flow from Operating Activities $ 400 Less: Run-Rate CapEx (90) CapEx for Clariant Integration (10) CapEx for IT System Upgrade (15) Total CapEx (115) Free Cash Flow $ 285 Adjusted EBITDA $ 635 Net Debt / Adjusted EBITDA 1.7x 17

  18. Slide 18: Dyneema Acquisition

    DYNEEMA ACQUISITION

  19. Slide 19: Dyneema acquisition overview

    • Purchase price of $1.48B represents 11.4x multiple of 2022 EBITDA 2022E Sales By Region ($M) • Acquisition will expand Avient’s composites and fiber portfolio with Dyneema®, the World’s Strongest Fiber™ $65M (16%) • $415M sales and 30%+ EBITDA margins; Immediately (1) (2) accretive to pro forma 20

  20. Slide 20: Fit with Four Pillar Strategy

    F I T W I T H F O U R P I L L A R S T R AT E G Y Specialization Globalization • Innovation-led organization with • Global customer base with an tremendous intellectual property value in established presence across all major trademarks, patents and “know-how” geographic regions • Deep history of appl

  21. Slide 21: Dyneema Overview

    DY N E E M A ® OV E RV I E W KEY INDUSTRIES PERSONAL PROTECTION MARINE & SUSTAINABLE CONSUMER INFRASTRUCTURE Military • Law Enforcement • First Consumer • Outdoor High Performance • Responders Body Armor • Helmets • Towing / Mooring • Aquaculture • Safety Equipment Vehicle Protection Floating Wind •

  22. Slide 22: Technology

    Value chain & Overview Competition Strategy Innovation Financials MIF TECHNOLOGY Go-to-market • True specialty business – the World’s Strongest Fiber™ Patents • Deep history of application development with customers, 2,500 strongest in the industry 1,200 1,300 • The only UHMwPE (ultra-high molecular

  23. Slide 23: Formulation Process

    FORMULATION PROCESS • Like Avient, Dyneema® offers similar core competencies around formulation and material science • Technology that combines polymers and fibers to provide specialized, high performing solutions for customers • Design capabilities ensure that applications are highly customized for

  24. Slide 24: Dyneema in the Value Chain

    DYNEEMA ® IN THE VALUE CHAIN INTERMEDIATE MANUFACTURING OEM / APPLICATION (CUSTOMERS) Military Personnel, Law Enforcement UHMwPE Heavy Marine, Fiber / Tapes Offshore Wind Energy and Mooring, Aquaculture • Material Science • Formulation • Service Outdoor, Footwear, Apparel, Inflatables 24

  25. Slide 25: Demand Trends

    DEMAND TRENDS • Military spending and near-term demand for higher performing personal protection products (like Dyneema®) expected to increase o European NATO members annual defense spend expected to increase by up to 20%(1) o Japan aiming to almost double defense spending over the next 5 years(2) o

  26. Slide 26: Products: Alignment with Sustainability Goals

    P RO D U C T S ALIGNMENT WITH SUSTAINABILITY GOALS 26

  27. Slide 27: Avient's Existing Composites Portfolio

    AVIE NT ’S E XIS T ING COMP OS IT E S P ORT F OL IO DIVERSE CAPABILITIES AND SOLUTIONS SERVING MANUFACTURERS AND OEMS LFT Tapes Laminates/Panels Shapes Pultrusion Engineered Fibers 27

  28. Slide 28: Avient's Composites Portfolio Sales and EBITDA

    AV I E N T ’ S C O M P O S I T E S P O RT F O L I O S A L E S A N D E B I T DA $750 $700 $680 200 • Dyneema® acquisition will further $650 $600 improve Composites EBITDA margins $180 $550 to 26% 150 $500 $450 $400 • Dyneema® will complement our $350 100 existing portfolio with deep formulation $300

  29. Slide 29: Distribution Divestiture Considerations

    D I S T R I BU T I O N D I V E S T I T U R E C O N S I D E R AT I O N S

  30. Slide 30: Distribution Highlights

    D I S T R I BU T I O N H I G H L I G H T S • Leading North American Distribution business with longstanding blue-chip supplier and customer 150 relationships EBITDA (in $M) • Commercial excellence and regulatory knowledge have grown healthcare portfolio to over 25% of sales and $105 positioned busin

  31. Slide 31: Dyneema Transaction Overview

    DY N E E M A ® T R A N S AC T I O N OV E RV I E W Transaction - $1.48B net purchase price Value - Represents 11.4x expected 2022 EBITDA - Committed financing in place - Permanent financing to be combination of available cash on-hand, new Financing Senior Unsecured Notes, new Senior Secured Term Loan

  32. Slide 32: Capital Structure / Leverage

    C A P I TA L S T RU C T U R E / L E V E R AG E (1) Pro Forma Capitalization (2022 estimates, all figures in $M) • Financing commitments secured from Morgan Stanley Cash and Cash Equivalents $ 595 and J.P. Morgan Senior Secured Term Loan due 2026 $ 605 • New Senior Secured Term Loan B and new Senior

  33. Slide 33: Two-Year Leverage Goal

    T WO - Y E A R L E V E R AG E G OA L Clariant Color Acquisition Dyneema® Acquisition 3.5x 2.9x 2.7x 2.5x 2.2x 1.7x (1) (1) (2) 2019PF 2020PF 2022E 2022PF 2023E 2024E (1) Pro forma for the acquisition of the Clariant Color business 33 (2) Pro forma for the acquisition of Dyneema® and potential divest

  34. Slide 34: Pro Forma Modeling

    P RO F O R M A M O D E L I N G 2022E ® Pro Forma Pro Forma Avient Dyneema ® Distribution ($M) w/ Dyneema w/Sale Revenue $ 5,100 $ 415 $ 5,515 $ (1,775) $ 3,740 Adjusted EBITDA 635 130 765 (105) 660 EBITDA % 12% 31% 14% 6% 18% Pro Forma EPS (Adjusted) $ 3.50 $ 0.00 $ 3.50 $ (0.56) $ 2.94 Pro Forma EP

  35. Slide 35: Our Specialty Journey

    ©. x\ 4 \ } OUR SPECIALTY JOURNEY ay \ ¥. 4 ) ae Af SAVIENT

  36. Slide 36: Acquisition History

    AC Q U I S I T I O N H I S TO RY Established Acquisitions (> 7 years) Commercial Operating Income Operating Margins Resources(1) ($ in millions) $122 21% 360 + 39% + 210% + 1200 bps 259 $40 9% At Acquisition 2021 At Acquisition 2021 At Acquisition 2021 (1) Commercial Resources include associate head

  37. Slide 37: Clariant Color Acquisition

    C L A R I A N T C O LO R AC Q U I S I T I O N Clariant Color EBITDA Growth ($ in millions) $205 • Acquisition of Clariant Color business significantly expanded presence in healthcare, packaging and consumer end markets $133 2019PF (1) 2021 • Strength of portfolio – double-digit annual EBITDA growth

  38. Slide 38: Specialty Transformation

    S P E C I A LT Y T R A N S F O R M AT I O N 100% % of Adjusted EBITDA(1) 80% 60% 100% 40% 86% 66% 20% 46% 0% 7% (2) 2005 2010 2015 2021 2022 PF JVs Distribution Performance Products & Solutions Specialty (1) Adjusted EBITDA is EBITDA excluding corporate costs and special items (2) Pro forma for the

  39. Slide 39: Culture and People

    CULTURE AND PEOPLE Great | KK 100 wns Place Sustainable Newsweek To Companies a _ Work ® WSJ MANAGEMENT TOP Certified 250 DEC ca 2022 THE BEST-RUN COMPANII AS RANKED BY THE DRUCKER INSTITUTE a SC AVIENT

  40. Slide 40: Our Specialty Journey Continues

    O U R S P E C I A LT Y J O U R N E Y C O N T I N U E S • Dyneema® brings leading technology and brand with the World’s Strongest Fiber™, deep history of application development and strong management team focused on specialty applications • Dyneema® transaction is aligned with our previously stated a

  41. Slide 41: Avient

    YX AVIENT

  42. Slide 42: Peer Comparisons

    PEER COMPARISONS 42

  43. Slide 43: Avient Is Asset Light

    AV I E N T I S A S S E T L I G H T Capex / Revenue As a specialty formulator, we don’t 2022E (%) require significant capital 11 investment, as compared to the base resin raw material suppliers 8 we purchase from. Even more, our 7 7 manufacturing capabilities are flexible and easily adaptable to 5 5

  44. Slide 44: High Free Cash Flow Conversion

    H I G H F R E E C A S H F LOW CONVERSION Free Cash Flow Conversion (1) 2022E (%) Being asset light helps us to generate strong free cash flow that is in line 86 86 86 89 86 82 84 with other specialty formulators. 78 77 81 80 76 76 76 67 67 Our free cash flow supports shareholder value creation throu

  45. Slide 45: EBITDA Margins vs. Peers

    2 0 2 2 E B I T DA M A RG I N S V S . P E E R S Median: 15% Median: 21% 28% 28% 26% 25% 22% 21% 19% 18% 16% 16% 15% 15% 14% 14% 12% 12% 9% 9% Avient Today ECL HXL SCL BNR RPM EMN UNVR KWR CE FUL ALB FMC ASH HUN Avient PF AVY PPG Avient Specialty Other Specialty / Formulators Chemical Companies Avien

  46. Slide 46: Our Valuation Versus Peers

    O U R VA LUAT I O N V E R S U S P E E R S With the Dyneema and Clariant Color business acquisition and divestment of the PP&S business, Total Enterprise Value / NTM EBITDA along with the proposed sale of our Distribution business, our exposure is now concentrated in Historic Multiple less-cyclical a

  47. Slide 47: Appendix

    APPENDIX SC AVIENT

  48. Slide 48: Raw Material and Supply Chain Update

    RAW MATERIAL AND SUPPLY CHAIN UPDATE Annual Purchases • Significant raw material price inflation and Performance tight inventory continued in Q1 2022 Additives 15% Other Raw Materials o The average cost of hydrocarbon based 30% materials was up 30% Pigments 13% o The average cost of non-hydrocarbon

  49. Slide 49: Segment Data

    SEGMENT DATA SC AVIENT

  50. Slide 50: 2021 Segment, End Market and Geography

    2021 SEGMENT, END MARKET AND GEOGRAPHY SEGMENT FINANCIALS END MARKET REVENUE GEOGRAPHY REVENUE Energy Telecommunications 2% Latin America $4,819M $581M 4% Consumer 9% U.S. & Canada Building and 23% 50% Construction $94M 10% Asia 16% $1,631M $164M Transportation 11% $919M $409M Packaging $2,402M 19%

  51. Slide 51: Color, Additives & Inks

    COLOR, ADDITIVES & INKS 2021 REVENUE | $2.4 BILLION END MARKET REGION Energy 1% Telecommunications Latin America 1% 7% Transportation 9% US & Canada 32% Packaging Building & Asia 34% Construction 21% 10% Industrial 16% Healthcare Consumer 8% 21% EMEA 40% 51 All charts reflect 2021 financials

  52. Slide 52: Specialty Engineered Materials

    S P E C I A LT Y E N G I N E E R E D M AT E R I A L S 2021 REVENUE | $919 MILLION END MARKET REGION Energy 7% Asia US & Canada Building & Consumer 20% 55% Construction 27% 11% Industrial 11% Healthcare 10% Transportation EMEA 11% 25% Packaging 7% Telecommunications 16% 52 All charts reflect 2021 fin

  53. Slide 53: Distribution

    DISTRIBUTION 2021 REVENUE | $1.6 BILLION END MARKET REGION Energy Telecommunications Building and 1% 1% Latin Construction America 8% 17% US & Canada Healthcare 80% 26% Transportation Asia 16% 3% Consumer Industrial 23% 20% Packaging 5% KEY SUPPLIERS 53 All charts reflect 2021 financials

  54. Slide 54: Total Company Regional Sales by End Market

    T O T A L C O M PA N Y R E G I O N A L S A L E S BY END MARKET Energy Energy Telecommunications 2% Telecommunications 4% 4% 5% Building & Consumer Packaging Construction 25% Building & Construction 32% 10% 12% Transportation 13% US & Canada Transportation EMEA 12% (25% of sales) (50% of sales) Indus

  55. Slide 55: Reconciliation of Non-GAAP Financial Measures

    Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in millions, except for per share data) 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

  56. Slide 56: Reconciliation to Condensed Consolidated Statements of Income

    Three Months Ended March 31, 2021 GAAP Special Adjusted Reconciliation to Condensed Consolidated Statements of Income Results Items Results Operating Income $ 120.4 $ 2.4 $ 122.8 Income before income taxes $ 102.6 $ 2.4 $ 105.0 Income tax expense - GAAP (22.9) — (22.9) Income tax impact of special i

  57. Slide 57: Reconciliation of EBITDA by Segment

    Three Months Ended Year Ended Reconciliation of EBITDA by Segment March 31, December 31, 2022 2021 2021 Operating income: Color, Additives and Inks $ 94.5 $ 88.8 $ 303.1 Specialty Engineered Materials 39.7 34.2 132.0 Distribution 24.2 24.0 93.2 Corporate and eliminations (29.8) (26.6) (147.1) Operat

  58. Slide 58: Reconciliation to EBITDA and Adjusted EBITDA

    Three Months Ended Year Ended March 31, December 31, Reconciliation to EBITDA and Adjusted EBITDA: 2022 2021 2021 Net income from continuing operations – GAAP $ 84.5 $ 79.7 $ 230.6 Income tax expense 26.6 22.9 74.0 Interest expense 16.9 19.3 75.3 Depreciation and amortization from continuing operati

Avient — Fermium and Wells Fargo Conferences 2022 on 6ix