Avient Corporation · NYSE:AVNT
Avient — Goldman Sachs and Morgan Stanley Conferences 2020
27 slides from Avient's conference presentation, October 2020
Slide 1: Avient Corporation
AVIENT CORPORATION (NYSE: AVNT) OCTOBER 2020
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: Segment, End Market and Geography
SEGMENT, END MARKET AND GEOGRAPHY SEGMENT FINANCIALS END MARKET REVENUE GEOGRAPHY REVENUE Electrical & Building & Electronics Latin America $3,650M $425M Construction 6% 4% Consumer 9% U.S. & Canada 23% 49% Wire & Cable $65M 7% Asia $1,050M 17% $115M $685M Transportation 9% $310M $2,000M Packaging I
Slide 6: 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 7: 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 16,000 who do. success. Our except
Slide 8: 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 9: 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 10: Sustainable Solutions
S U S TA I NA B L E S O LU T I O N S Revenue from Sustainable Solutions(1) 2016–2020 $550M Avient has a highly technical and broad portfolio of material solutions that help our customers—and our planet—be more sustainable. These sustainable solutions make up a growing portfolio for our company, as d
Slide 11: Investment in Commercial Resources Drives Innovative Product Portfolio and Sales Growth
I N V E ST M E N T I N C O M M ERC I A L R E S O U RC E S D R I V E S I N N O V AT I V E P R O D U C T P O R T F O L I O A N D S A L E S G R O W T H Commercial Resources 872 616 + 42% 208 Our world-class vitality index of 37% represents sales from products introduced 467 + 32% in the last five years
Slide 12: Returning Value to Shareholders
R E TU R N I N G VA LU E TO S H A R E H O L D E R S Free Cash Flow Dividends Share Repurchases Deleveraging ~$240MM ~$350MM ~$1Bn 2.6x PAID OVER LAST 10 YEARS REPURCHASED TARGET NET OVER LAST 10 YEARS LEVERAGE BY 2021 240 3.1x 0.79 0.81 0.9 0.9 1.0 0.72 160 0.7 0.8 2.6x 0.58 $ per share 0.50 0.6 0.4
Slide 13: 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 E RG I E S U P DATE Another unique value creation lever at Avient is synergy capture with our recent acquisition of Clariant Masterbatch. Actions are already underway in three primary categories: Administrative, Sourcing and Operations. At the tim
Slide 14: EBITDA Margin Expansion and EPS Accretion
E B I T DA M a r g i n E x p a n s i o n a n d E P S A c c r e ti o n EBITDA as % of Sales 16.7% 13.8% 11.6% (1) (1,3) Avient PF Avient PF ex.(1) Avient PF ex. Distribution Distribution w/ Synergies Adjusted EPS The cost synergies from the Clariant Masterbatch acquisition will help drive substantial
Slide 15: 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 16: Peer Comparisons
PEER COMPARISONS 16
Slide 17: 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 18: 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: 75% strong free cash flow that is in line with specialty formulators. 89 83 86 85 84 83 80 82 82 78 76 76 75 71 70 68 63 61 56 58 Our free cash flow supports s
Slide 19: Avient Is Modestly Levered
AV I E N T I S M O D E S T LY L EV ER ED Net Debt / 2021E EBITDA (1) Median: 2.8x Median: 3.0x 4.8x We typically operate at 2.5–3.0x net 4.5x debt to EBITDA. At times, we will 3.8x 3.9x exceed that level for strategic 3.4x 3.4x 3.1x 3.1x 3.2x acquisitions that generate sufficient 2.8x 2.9x 3.0x 3.0x
Slide 20: The Current Avient Valuation Disconnect
T H E C U R R E N T AV I E N T VA LUAT I O N D I S C O N N E C T Our transformation and business model are still being understood, and as a result, we are currently trading at a discount to peer companies Our financial metrics are consistent with specialty formulator peers, yet our EBITDA multiple i
Slide 21: 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 (1) / 2021E EBITDA (2) Our current valuation implies an EBITDA multiple that is significantly below specialty formulator peers and Median: 14.1x Median: 10.1x 21.5 our historic valuations, when the company had considerable exposure to m
Slide 22: 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 the near te
Slide 23: Segment Highlights
SEGMENT HIGHLIGHTS
Slide 24: Color, Additives & Inks
COLOR, ADDITIVES & INKS 2020 PF REVENUE | $2.0 BILLION END MARKET REGION EBITDA DOLLAR & MARGIN EXPANSION Electrical & Wire & Cable Electronics Latin America 15.5% 3% 2% 6% Transportation US & Canada $310 6% 32% Packaging Building & 37% Construction Asia 8% 23% Industrial 14% Healthcare 2.0% 8% Euro
Slide 25: 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 2020E REVENUE | $685 MILLION END MARKET REGION EBITDA DOLLAR & MARGIN EXPANSION Building & 16.8% Construction Transportation 2% 10% Consumer Asia 23% 18% US & Canada 59% Industrial 10% Healthcare 10% Electrical & Electronics 14% Packaging Europe
Slide 26: Distribution
DISTRIBUTION 2020E REVENUE | $1.05 BILLION END MARKET REGION EBITDA DOLLAR & MARGIN EXPANSION Building & Construction Wire & Cable Electrical & 4% 1% Latin Electronics America US & Canada 4% 19% 79% 6.2% Healthcare 30% Transportation $65 15% Asia 2% 2.9% Industrial 19% $20 Consumer Packaging 24% 3%
Slide 27: 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 EUROPE ASIA (58% of sales) (25% of sales) (17% of sales) Electrical & Electrical & Building & Electronics Electrical & Construction 4% Building & Electronics Building & Electronics Construction 3% 9% 5% Construction 8% 4% Wire &
Avient — Goldman Sachs and Morgan Stanley Conferences 2020 on 6ix