Avient Corporation · NYSE:AVNT
Avient — Investor Presentation (February 2021)
40 slides from Avient's investor presentation, Feb 17, 2021
Slide 1: Avient Corporation Investor Meetings
AVIENT CORPORATION (NYSE: AVNT) FEBRUARY 17-18, 2021 INVESTOR MEETINGS HOSTED BY GOLDMAN SACHS AND M O R G A N S TA N L E Y
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 expecta
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: Better Together: PolyOne and Clariant Masterbatch
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 M A S T ER BATC H Just a few months ago, we completed the acquisition of the Clariant Masterbatch We are better together through: business, the largest acquisition in the 20-year history of our company. Keeping Safety First — PolyOne and Cl
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
Slide 6: 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 7: Avient's Value Creation Levers
AV I E N T ’ S VA LUE C R E AT I O N L E V E R S Exposure to high growth end markets Investment in commercial resources and innovation Strong free cash flow generation / capital deployment Clariant Masterbatch synergies COVID recovery Re-Rating: Current share price valuation Avient is poised for nea
Slide 8: Q4 and Full Year 2020 Performance
Q4 AND FULL YEAR 2020 PERFORMANCE
Slide 9: Q4 2020 Organic Performance
Q4 2020 ORGANIC PERFORMANCE ($ in millions except EPS) +8% $997 $922 Sales • Record 4th quarter sales, adjusted operating income and adjusted EPS 2019 PF (1) 2020 performance +38% Adjusted $80 • All segments delivered year-over-year $58 Operating sales and operating income growth, led Income by cons
Slide 10: Q4 2020 Segment Performance
Q4 2020 SEGMENT PERFORMANCE Sales Operating Income ($ in millions) +8% +38% +7% $997 $80 $922 $526 +45% $490 $58 $58 +12% $305 +58% $40 +7% $272 $191 +6% $30 $178 $17 $18 $19 $100 $100 $100 $100 $100 $100 $5 $5 $5 $5 $5 $5 (1) (2) Distribution SEM Distribution CAI SEM CAI Total Avient Distribution C
Slide 11: 2020 Highlights
2020 HIGHLIGHTS • Completed transformational Clariant Masterbatch acquisition and created new brand name Avient • Increased pro forma adjusted EPS 11% from $1.74 to $1.93 as an essential supplier during the pandemic and due to growth in demand for consumer applications • Specialty Engineered Materia
Slide 12: Clariant Masterbatch: Transformational Acquisition
CLARIANT MASTERBATCH: TRANSFORMATIONAL ACQUISITION Avient Portfolio Transformation 59% 15% Healthcare 21% • Acquisition of Clariant Masterbatch 22% 4% Packaging significantly expands presence in 8% 10% Consumer 23% healthcare, packaging and consumer end 2006 2020PF (1) markets Clariant MB EBITDA Gro
Slide 13: EBITDA Margin Expansion
EBITDA MARGIN EXPANSION Q4 Full Year 19.8% 17.6% 14.5% 15.2% • Composites and Outdoor High SEM Performance applications drove positive mix within SEM 16.1% 16.2% 15.2% 13.5% CAI • Clariant Masterbatch synergy realization under way and expected to drive further margin 6.3% 6.0% 6.4% 6.3% expansion in
Slide 14: Spotlight: Composites
SPOTLIGHT: COMPOSITES ($ in millions) $94.4 SEM $83.7 • SEM delivers a record year in 2020 – 13% (13.3%) Operating (11.2%) operating income growth and over 200 bps Income in margin expansion year-over-year (OI % of Sales) 2019 2020 $26.8 $19.1 • Prior investments in composites platform Composites an
Slide 15: Free Cash Flow and Capital Allocation
FREE CASH FLOW AND CAPITAL ALLOCATION Free Cash Flow Dividends Share Repurchases Deleveraging ~$338MM ~$350MM ~$1Bn 2.7x PAID OVER LAST 10 YEARS REPURCHASED NET LEVERAGE OVER LAST 10 YEARS $338 0.9 1.0 0.85 0.9 0.79 0.81 0.72 0.8 0.7 3.5x 0.58 0.6 0.50 $ per share $160 0.42 0.5 2.7x 0.34 $Bn 0.26 0.
Slide 16: Great Place to Work!
16 GREAT PLACE TO WORK! Our employees have spoken! Our company culture is amazing and our Certified Source: 2020 Great Place to Work Trust Index® Survey bn) USA Great Place to Work Certification” proves it. SC AVIENT
Slide 17: 2021 Outlook
2021 OUTLOOK
Slide 18: Clariant Integration & Cost Synergies Update
C L A R I A N T I N T E G R AT I O N & C O S T S Y N ERG I E S U PDATE Initial Revised 2021 Synergies Three-Year Three-Year Expected ($ millions) Estimate Estimate Realization Administrative $ 18 $ 20 $ 15 Sourcing 24 30 15 Operational 18 25 5 Total Synergies $ 60 $ 75 $ 35 • Integration going extre
Slide 19: Organic Growth Projections – Q1
ORGANIC GROWTH PROJECTIONS – Q1 ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 10% + 20% + 32% $1,090 $103 $0.70 $991 $86 $0.53 (1) (1) (1) 2020PF 2021E 2020PF 2021E 2020PF 2021E (in millions) (in millions) 19 (1) Financial information is pro forma to include a full year of
Slide 20: Organic Growth Projections – Full Year
ORGANIC GROWTH PROJECTIONS – FULL YEAR ( T O TA L C O M PA N Y ) Sales Adjusted Operating Income Adjusted EPS + 8% + 17% + 24% $4,100 $360 $2.40 $3,783 $1.93 $308 (1) (1) (1) 2020PF 2021E 2020PF 2021E 2020PF 2021E (in millions) (in millions) 20 (1) Financial information is pro forma to include a ful
Slide 21: 2021 Organic Sales and Operating Income
2021 ORGANIC SALES AND OPERATING INCOME ( T O TA L C O M PA N Y ) Adjusted Sales Growth Rate Operating $ millions Income (1) 2020 Pro forma $3,783 $308 Sustainable Solutions 60 11% 24 Healthcare 60 11% 18 Composites 20 10% 10 Growth in Emerging Regions 50 7% 11 Other (GDP growth) 82 5% 11 Sub-total
Slide 22: Cash Flow and Leverage
C A S H F LOW A N D L E V E R AGE ($ millions) 2020 2021E Adjusted EBITDA 382 510 Working Capital: Source / (Use) 116 (30) Cash Taxes (40) (53) • Asset light business generates Interest Paid (67) (76) significant free cash flow CapEx (62) (75) CapEx for Synergy Capture (2) (20) Restructuring for Syn
Slide 23: 2021 Projections
2021 PROJECTIONS • 8% increase in sales drives 24% increase in adjusted EPS to $2.40 ($2.70 excluding step-up depreciation and amortization) as a result of continued growth in sustainable solutions and synergy capture • Clariant synergy capture ahead of schedule: $35M of savings planned from Clarian
Slide 24: Peer Comparisons
PEER COMPARISONS 24
Slide 25: 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 (%) require significant capital Median: 3% Median: 5% 25 investment, as compared to the base resin raw material suppliers we purchase from. Even more, our manufacturing capabilities are flexible and easily ad
Slide 26: 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 Median: 83% Median: 76% strong free cash flow that is in line 87 92 88 85 86 86 with specialty formulators. 81 81 81 79 79 79 76 76 75 73 67 67 64 59 60 Our free cash flow support
Slide 27: 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 implies an EBITDA multiple that is significantly below specialty formulator peers and Median: 12.6x Median: 11.0x 25.2 our historic valuations, when the 23.1 company had considerable exposure 21.1 to
Slide 28: 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 exp
Slide 29: Segment Highlights
SEGMENT HIGHLIGHTS
Slide 30: 2020 Segment, End Market and Geography
2020 SEGMENT, END MARKET AND GEOGRAPHY SEGMENT FINANCIALS END MARKET REVENUE GEOGRAPHY REVENUE Electrical & Building & Electronics Latin America $3,783M $457M Construction 6% 4% Consumer 8% U.S. & Canada 23% 50% Wire & Cable $70M 6% Asia 16% $1,110M $124M $709M Transportation 10% $331M $2,043M Packa
Slide 31: Color, Additives & Inks
COLOR, ADDITIVES & INKS 2020 PF REVENUE | $2.0 BILLION END MARKET REGION Electrical & Wire & Cable Electronics Latin America 3% 2% 7% Transportation US & Canada 7% 31% Packaging 35% Building & Asia Construction 22% 8% Industrial 14% Healthcare 8% EMEA Consumer 40% 23% 2020 figures Pro forma for acqu
Slide 32: 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 2020 REVENUE | $709 MILLION END MARKET REGION Building & Construction 2% Industrial 10% Consumer Asia 19% US & Canada 24% 58% Transporation 11% Healthcare 10% Electrical & Electronics 13% Packaging EMEA 6% 23% Wire & Cable(1) 24% (1) Approximatel
Slide 33: Distribution
DISTRIBUTION 2020 REVENUE | $1.1 BILLION END MARKET REGION Building & Wire & Cable Construction Latin 1% Electrical & 4% America Electronics 15% 5% US & Canada Healthcare 82% 29% Asia Transportation 3% 14% Industrial 20% Consumer 25% Packaging 2% KEY SUPPLIERS 33
Slide 34: 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 AMERICAS EMEA ASIA (58% of sales) (26% of sales) (16% of sales) Electrical & Electrical & Electrical & Building & Electronics Construction 4% Building & Electronics Building & Electronics Construction 3% 9% 5% Construction 8% 4% Wire & C
Slide 35: 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
Slide 36: Reconciliation of EBITDA by Segment
Three Months Ended Year Ended Reconciliation of EBITDA by Segment December 31, December 31, 2020 2019 2020 2019 Sales: Color, Additives and Inks $ 525.8 $ 226.7 $ 1,502.9 $ 1,003.8 Specialty Engineered Materials 190.6 177.5 708.8 745.7 Distribution 305.1 272.4 1,110.3 1,192.2 Corporate and eliminati
Slide 37: Reconciliation to Adjusted EBITDA
Three Months Ended Year Ended December 31, December 31, Reconciliation to Adjusted EBITDA: 2020 2019 2020 2019 Net income from continuing operations – GAAP $ 74.7 $ 6.4 $ 133.8 $ 75.7 Income tax expense (17.3) 12.9 5.2 33.7 Interest expense 19.3 11.9 74.6 59.5 Depreciation and amortization from cont
Slide 38: Reconciliation of Pro Forma Adjusted EPS, Q4 2019
Three Months Ended December 31, 2019 Clariant MB Pro Forma Reconciliation of Pro Forma Adjusted Special Adjusted Pro Forma Adjusted Earnings per Share: Avient Items Avient Adjustments(1) Avient Sales $ 658.6 $ — $ 658.6 $ 263.5 $ 922.1 Operating income $ 20.5 $ 24.6 $ 45.1 $ 13.2 $ 58.3 Interest exp
Slide 39: Reconciliation of Pro Forma Adjusted EPS, Year 2019
Year Ended December 31, 2019 Clariant MB Pro Forma Reconciliation of Pro Forma Adjusted Special Adjusted Pro Forma Adjusted Earnings per Share: Avient Items Avient Adjustments(1) Avient Sales $ 2,862.7 $ — $ 2,862.7 $ 1,118.6 $ 3,981.3 Operating income $ 156.8 $ 71.7 $ 228.5 $ 72.9 $ 301.4 Interest
Slide 40: Reconciliation of Pro Forma Sales, Operating Income, and EBITDA
Three Months Ended Year Ended December 31, 2019 December 31, 2019 Reconciliation of pro Clariant MB Clariant MB forma sales, operating Pro Forma Pro Forma Pro Forma Pro Forma income, and EBITDA: CAI Adjustments(1) CAI CAI Adjustments(1) CAI Sales $ 226.7 $ 263.5 $ 490.2 $ 1,003.8 $ 1,118.6 $ 2,122.4