Avient Corporation · NYSE:AVNT
Avient — Investor Presentation (March 2021)
33 slides from Avient's investor presentation, Mar 18, 2021
Slide 1: Avient Corporation IR Meetings
AVIENT CORPORATION (NYSE: AVNT) MARCH 18, 2021 IR MEETINGS HOSTED BY FERMIUM RESEARCH
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: 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 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: Future Growth in Excess of GDP Is Driven By
F U T U R E G ROW TH I N E XC E S S O F G D P I S D R I V E N B Y: Our company is positioned to sustainably grow at a rate that exceeds GDP. We will do so though our investments and focus on sustainable solutions for high-growth markets, including healthcare, consumer, packaging and composites/5G. T
Slide 9: 2020 Performance
2020 PERFORMANCE
Slide 10: 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 $1.93 as an essential supplier during the pandemic and due to growth in demand for consumer applications • Specialty Engineered Materia
Slide 11: Clariant Masterbatch: Transformational Acquisition
CLARIANT MASTERBATCH: TRANSFORMATIONAL ACQUISITION Avient Portfolio Transformation 59% 15% Healthcare 21% • Acquisition of Clariant Masterbatch 22% 4% Packaging significantly expands presence in 8% 10% Consumer 23% healthcare, packaging and consumer end 2006 2020PF (1) markets Clariant MB EBITDA Gro
Slide 12: EBITDA Margin Expansion
EBITDA MARGIN EXPANSION 17.6% 15.2% SEM • Composites and Outdoor High Performance applications drove positive mix within SEM 16.2% 15.2% CAI • Clariant Masterbatch synergy realization under way and expected to drive further margin expansion in 2021 6.4% 6.3% Distribution • Portfolio transformation t
Slide 13: Spotlight: Composites
SPOTLIGHT: COMPOSITES ($ 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 14: 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 $Bn 0.26 0.
Slide 15: Great Place to Work!
15 GREAT PLACE TO WORK! Our employees have spoken! Our company culture is amazing and our Certified Source: 2020 Great Place to Work Trust Index® Survey bn) USA Great Place to Work Certification” proves it. SC AVIENT
Slide 16: 2021 Outlook
2021 OUTLOOK AS PROVIDED ON FEBRUARY 9, 2021 WEBCAST
Slide 17: Clariant Integration & Cost Synergies Update
C L A R I A N T I N T E G R AT I O N & C O S T S Y N ERG I E S U PDATE Initial Revised 2021 Synergies Three-Year Three-Year Expected ($ 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 18: 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) 18 (1) Financial information is pro forma to include a full year of
Slide 19: 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) 19 (1) Financial information is pro forma to include a ful
Slide 20: 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 $308 Sustainable Solutions 60 11% 24 Healthcare 60 11% 18 Composites 20 10% 10 Growth in Emerging Regions 50 7% 11 Other (GDP growth) 82 5% 11 Sub-total
Slide 21: Cash Flow and Leverage
C A S H F LOW A N D L E V E R AGE ($ 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 22: 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 23: Peer Comparisons
PEER COMPARISONS 23
Slide 24: 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 investment, as compared to the Median: 3% Median: 5% 23 base resin raw material suppliers we purchase from. Even more, our manufacturing capabilities are flexible and easily ad
Slide 25: 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: 84% Median: 77% strong free cash flow that is in line 89 89 85 86 86 85 with specialty formulators. 82 80 83 82 81 78 76 77 77 76 75 73 70 69 Our free cash flow supports 4
Slide 26: 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 below Median: 13.5x Median: 11.2x specialty formulator peers and some 28.8 of our more highly valued chemical 26.3 peers. 23.3 18.6 With the Clariant Masterbatch 14
Slide 27: 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 28: Segment Highlights
SEGMENT HIGHLIGHTS
Slide 29: 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 30: 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 31: 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% Transportation 11% Healthcare 10% Electrical & Electronics 13% Packaging EMEA 6% 23% Wire & Cable(1) 24% (1) Approximate
Slide 32: 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 32
Slide 33: 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