Avient Corporation · NYSE:AVNT
Avient — Non-Deal Roadshow (November 2021)
47 slides from Avient's roadshow presentation, November 2021
Slide 1: Avient Corporation Investor Meetings
AVIENT CORPORATION IN VESTOR M EE T INGS (NYSE: AVNT) N OVEMBER 2021
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
Slide 3: 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
Slide 4: What We Do: Material 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
Slide 5: Why Avient Wins
W H Y AV I E N T W I N S At Avient, we’ve built a culture of winning and how we do so is unique, lasting and Speed to market is essential today, and Avient plays a crucial role in our customers’ difficult to replicate. It’s why customers choose us. And we have over 21,000 who do. success. Our except
Slide 6: Better Together: PolyOne and Clariant Color
B ET T E R TO G E TH E R : P O LYO NE A N D C L A R I A N T C O LO R In July 2020, we completed the acquisition of the Clariant Color business, the largest We are better together through: acquisition in the 20-year history of our company. Keeping Safety First — PolyOne and Clariant are both ACC Resp
Slide 7: Clariant Cost Synergies
C L A R I A N T C O S T S Y N ERG I E S Synergies Three-Year • On-track to realize $50 million of expected ($ millions) Estimate synergies in 2021 – up from earlier estimate of $35 million Administrative $ 20 • Relentless focus on guiding principles for Sourcing 30 acquisition integration: safety fi
Slide 8: Complementary Technologies and Customers Drive Revenue Synergies
C O M P L E M E NTA RY T E C H N O LOG I E S A N D C U S TO M ER S D R I V E R E V E N U E S Y N E RG I E S The complementary aspects of our combined businesses are unquestionable. From technology portfolios to end markets to geographies and distribution channels, this acquisition made perfect sense
Slide 9: Q3 2021 Performance Update
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Slide 10: Q3 2021 Performance (Total Company)
Q3 2021 PERFORMANCE ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 32% + 34% + 52% $1,220 $0.70 $99 $925 $74 $0.46 2020 2021 2020 2021 2020 2021 (in millions) (in millions) 10
Slide 11: Q3 2021 Segment Performance
Q3 2021 SEGMENT PERFORMANCE CAI SEM Distribution ($ in millions) +19% +34% +58% +31% +28% +33% $234 $439 $587 $67 $32 $24 $494 $174 $51 $25 $18 $277 Sales Operating Income Sales Operating Income Sales Operating Income (1) 11
Slide 12: Specialty EBITDA Margin Expansion
SPECIALTY EBITDA MARGIN EXPANSION 17.6% 16.2% 15.3% 15.2% • Continued portfolio transformation to (1) CAI high-growth end markets and sustainable solutions 2018 2019 2020 YTD 2021 • Clariant Color synergy realization 18.4% • Investments in composites and outdoor 17.6% high performance applications d
Slide 13: CAI EBITDA Margin Expansion
CAI EBITDA MARGIN EXPANSION 19.8% 18.9% 18.9% • Synergy capture driving margin improvement Legacy CAI • Favorable mix with growth in healthcare, consumer and packaging 2019 2020 YTD 2021 end-markets • World-class vitality index of 35% 15.7% represents sales from products Legacy 11.9% 13.8% introduce
Slide 14: Brand Owners Committed to Increasing Use of Recycled Materials
B R A N D O W N E R S C O M M I T T E D TO I N C R E A S I N G U S E O F R E C YC L E D M AT E R I A L S (1) Percent recycled plastic used: Current Additional share needed to reach 2025 target (examples and not exhaustive) Brand Owner 1 9 41 Brand Owner 2 7 18 Brand Owner 3 7 13 Brand Owner 4 7 19 B
Slide 15: Enabling the Use of Recycled Content: Top 5 Gaps
E NA B L I N G T H E U S E O F R E C YC L E D C O N T EN T T O P 5 G AP S T H AT W E AR E A D D R E S S I N G 1) COLOR MANAGEMENT 2) DECONTAMINATION 3) MAINTAINING MECHANICAL PROPERTIES 4) MONO-MATERIAL 5) CONSISTENT RECYCLED CONSTRUCTION MATERIAL QUALITY 15
Slide 16: Case Study with Brand Owner
C A S E S T U DY WI T H B R A N D OWN E R G U I D I N G B R A N D S T O W H AT I S P O S S I B L E Virgin Resin Recycled Resin 16
Slide 17: Sustainability for a Better Tomorrow
S U S TA I NA B I L I T Y F O R A B ET T E R TO M O R ROW Revenue From Sustainable Solutions* 2016-2021 • Revenue from sustainable solutions expected to grow 18% in 2021 as our innovation efforts $930M and collaboration with customers continues to accelerate $790M • Investments centered around innov
Slide 18: Q3 2021 Sales and Operating Income
Q3 2021 SALES AND OPERATING INCOME ( T O TA L C O M PA N Y ) Adjusted Sales Growth Rate Operating $ millions Income Q3 2020 $925 $74 Sustainable Solutions 35 19% 14 Healthcare 51 44% 10 Composites 13 39% 6 Growth in Asia / LATAM 14 11% 3 Other 177 39% 16 Sub-total $1,215 31% $123 Supply Chain Disrup
Slide 19: Q3 End Market Sales Performance
Q3 END MARKET SALES PERFORMANCE (56% of total revenue) +33% (44% of total revenue) +14% +46% +40% +24% +40% +31% +20% Energy Telecom Building & Transportation Industrial Healthcare Packaging Consumer Construction (1) Q3 2020 Q3 2021 19 (1) Financial information is presented on a constant currency ba
Slide 20: Q3 Year-over-Year EBITDA Bridge
Q3 YEAR-OVER-YEAR EBITDA BRIDGE Adjusted $ millions EBITDA Q3 2020 $ 111 Demand 29 • Demand driven by growth CAI: in sustainable solutions, Price / Mix 51 Inflation (37) healthcare and consumer SEM: applications Price / Mix 25 Inflation (22) • Price increases more than Distribution: offsets raw
Slide 21: Q2 to Q3 Sequential EBITDA Bridge
Q2 TO Q3 SEQUENTIAL EBITDA BRIDGE Adjusted $ millions EBITDA Q2 2021 $ 159 CAI: Price / Mix 17 Inflation (8) • Price increases have more than SEM: covered raw material and freight Price / Mix 6 Inflation (5) inflation impacts of $300M year- to-date compared to 2020 Distribution: Price / Mix 35 I
Slide 22: Full Year 2021 Outlook
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Slide 23: Full Year Growth Projections
FULL YEAR GROWTH PROJECTIONS ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 26% + 40% + 55% $4,750 $430 $3.00 $3,783 $308 $1.93 (1) (1) (1) 2020PF 2021E 2020PF 2021E 2020PF 2021E (in millions) (in millions) 23 (1) Financial information is pro forma to include a full year of
Slide 24: Full Year 2019 – 2021 Growth
FULL YEAR 2019 – 2021 GROWTH ( T O TA L C O M PA N Y ) Sales Adjusted EBITDA Adjusted EPS + 19% + 31% + 72% $4,750 $3.00 $580 $3,981 $457 $3,783 $442 $1.93 $1.74 (1) (1) (1) (1) (1) (1) 2019PF 2020PF 2021E 2019PF 2020PF 2021E 2019PF 2020PF 2021E (in millions) (in millions) 24 (1) Financial informati
Slide 25: Creating Value for Shareholders
C R E AT I N G VA LU E F O R SH A R E H O L D E R S Share Performance Dividends Share Repurchases Deleveraging ~$4Bn ~$450MM ~$1Bn 2.1x MARKET CAP INCREASE PAID OVER LAST 11 YEARS REPURCHASED Q4 NET LEVERAGE OVER LAST 10 YEARS OVER LAST 10 YEARS 0.95 494% 0.85 0.79 0.81 1.0 1.0 0.9 0.72 0.9 3.5x 0.8
Slide 26: Sustainability Report
SUSTA INAB ILITY R EPORT Continuous ESG Improvement • Updated 2030 Sustainability Goals • Further disclosure on key Environmental, Social, and Governance impacts • Joined U.N. Global Compact and identified alignment with U.N. Sustainable Development Goals • Emphasized climate change commitment o Ann
Slide 27: 2030 Sustainability Targets
2 0 3 0 S U STA I NA B I L I T Y TA RG E TS Enable 100% of products manufactured for Obtain 60% of electricity demand from packaging applications to be recyclable or renewable sources. reusable. Deliver cumulative annual revenue Assess top 90% of supplier spend for alignment growth from sustainable
Slide 28: Avient ESG Ratings
AV I E N T E S G R AT I N G S ISS November 2021 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 28
Slide 29: 2021 Avient Investor Day
2 0 2 1 AV I E N T I N V E S TO R DAY • Investor Day to be held December 9, 2021 in New York, NY • The company will be doing a deep dive into its key long- term growth drivers with a particular focus on sustainable solutions Long-Term Revenue Growth Drivers Growth Rate Sustainable Solutions 8–12% He
Slide 30: Peer Comparisons
PEER COMPARISONS 30
Slide 31: Avient Is Asset Light
AV I E N T I S A SS E T L I G H T Capex / Revenue As a specialty formulator, we don’t 2021E (%) 9 require significant capital investment, as compared to the base resin raw material suppliers we purchase from. Even more, our 6 manufacturing capabilities are 5 5 5 flexible and easily adaptable to 4 4
Slide 32: High Free Cash Flow Conversion
H I G H F R E E C A S H F L OW CONVERSION Free Cash Flow Conversion (1) 2021E (%) Being asset light helps us to generate 93 strong free cash flow that is in line 86 89 85 85 with specialty formulators. 83 79 83 81 79 79 78 77 77 75 74 Our free cash flow supports shareholder value creation through in
Slide 33: Our Valuation versus Peers
O U R VA LUATI O N V E R S U S P E E R S Total Enterprise Value / 2021E EBITDA Our current valuation with updated 40.7 guidance implies an EBITDA multiple that is below many of our specialty formulator peers. 29.9 26.2 With the Clariant Color business 20.2 acquisition and divestment of the 16.7 16.5
Slide 34: Summary: Why Invest in Avient?
S U M M A RY: W H Y I N V E S T I N AV I E N T ? We are a specialty formulator that enables many of the world’s products through innovation and custom solutions. We take great pride in our essential role and responsibility—to our people, our customers, our planet and our shareholders. In 2021, we ex
Slide 35: Appendix
APPENDIX SX<AVIENT
Slide 36: 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 Q3 2021 Additives 15% Other Raw Materials o Average cost of hydrocarbon based 29% materials was up 65% year-over-year and Pigments 10% sequentially 15% Non-hy
Slide 37: Segment Data
SEGMENT DATA SX<AVIENT
Slide 38: 2021 YTD Segment, End Market and Geography
2021 YTD SEGMENT, END MARKET AND GEOGRAPHY SEGMENT FINANCIALS END MARKET REVENUE GEOGRAPHY REVENUE Energy Telecommunications 2% Latin America $3,617M $455M 4% Consumer 8% U.S. & Canada Building and 23% 51% Construction $72M 10% Asia 16% $1,206M $127M Transportation 12% $691M $321M Packaging $1,820M
Slide 39: Color, Additives & Inks
COLOR, ADDITIVES & INKS 2021 YTD REVENUE | $1.8 BILLION END MARKET REGION Energy 2% Telecommunications Latin America 1% 6% Transportation US & Canada 9% 31% Packaging Building & 34% Asia Construction 21% 10% Industrial 16% Healthcare EMEA Consumer 42% 7% 21% 39 All charts reflect 2021 YTD financials
Slide 40: 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 YTD REVENUE | $691 MILLION END MARKET REGION Energy 7% Building & Asia US & Canada Construction Consumer 20% 55% 10% 28% Industrial 11% Healthcare 10% Transportation EMEA 12% 25% Packaging 6% Telecommunications 16% 40 All charts reflect 2021
Slide 41: Distribution
DISTRIBUTION 2021 YTD REVENUE | $1.2 BILLION END MARKET REGION Energy Telecommunications Building and 1% Latin 1% America Construction 8% 15% Healthcare US & Canada 26% 81% Asia Transportation 4% 16% Consumer Industrial 22% 20% KEY SUPPLIERS Packaging 6% 41 All charts reflect 2021 YTD financials thr
Slide 42: 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 & 31% 10% Construction 12% Transportation 13% US & Canada Transportation EMEA 12% (25% of sales) (51% of sales) Indus
Slide 43: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures (Unaudited) (Dollars in millions, except for per share data) Three Months Ended September 30, 2021 GAAP Special Adjusted Reconciliation to Condensed Consolidated Statements of Income Results Items Results Operating income $ 78.7 $ 20.0 $ 98.7 Income from
Slide 44: Reconciliation to Pro Forma Adjusted EBITDA
Three Nine Three Months Ended Months Months Year Ended September 30, Ended Ended December 31, Reconciliation to Pro Forma June 30, September Adjusted EBITDA 2021 2020 2021 30, 2021 2020 2019 2018 Net income from continuing operations – GAAP $ 52.6 $ 2.6 $ 69.4 $ 201.7 $ 133.8 $ 75.7 $ 87.4 Income ta
Slide 45: Reconciliation of EBITDA by Segment
Nine Months Three Months Ended Ended Year Ended Reconciliation of EBITDA by Segment September 30, September 30, December 31, 2021 2020 2021 2020 2019 2018 Sales: Color, Additives and Inks $ 586.6 $ 493.8 $ 1,820.3 $ 1,502.9 $ 1,003.8 $ 1,046.5 Specialty Engineered Materials 233.6 174.1 690.7 708.8 7
Slide 46: Reconciliation of Pro Forma EBITDA - Color, Additives and Inks
Year Ended Reconciliation of Pro Forma EBITDA - Color, Additives and Inks December 31, 2020 2019 2018 Sales: Color, Additives and Inks $ 1,502.9 $ 1,003.8 $ 1,046.5 Clariant MB pro forma adjustments(1) 540.4 1,118.6 1,209.8 Pro forma sales $ 2,043.3 $ 2,122.4 $ 2,256.3 Operating income: Color, Addit
Slide 47: Reconciliation of Pro Forma Adjusted Earnings per Share
Year Ended December 31, 2020 Clariant MB Pro Forma Reconciliation of Pro Forma Adjusted Special Adjusted Pro Forma Adjusted Earnings per Share Avient Items Avient Adjustments(1) Avient Sales $ 3,242.1 $ — $ 3,242.1 $ 540.4 $ 3,782.5 Operating income $ 189.3 $ 73.7 $ 263.0 $ 45.0 $ 308.0 Interest exp