AVIENT CORP Q4 FY2024 earnings call

• Articulated a new purpose to be an innovator of material solutions to help customers succeed while enabling a sustainable world, intersecting secular trends and high-growth markets with technologies.
• 2024 saw organic revenue growth in all regions, with CAI growing 3% and SEM growing 6%, and adjusted EBITDA margins expanding for both segments.
• 2024 was a record year for safety, though goal remains 0 injuries.
• 14th consecutive year of dividend growth with a 5% increase in 2024.
• Launched third-generation Dyneema-HB330 and Dyneema-HB332 for military and law enforcement applications, offering superior ballistic protection and thermal performance.
• Seized S/4HANA ERP system implementation due to high costs and complexity, will use alternative solutions.

Color, Additives and Inks (CAI) segment: Organic sales grew 3% in 2024. Driven by strong demand in drug delivery, consumer discretionary products (Europe and Latin America) and building and construction materials (U.S.), but offset by declines in transportation. Adjusted EBITDA margin expanded 90 basis points. Specialty Engineered Materials (SEM) segment: Organic sales grew 6% in 2024. Supported by robust demand for engineered materials, health care applications, composites for building and construction and wind energy, and moderate growth in defense and consumer applications. Adjusted EBITDA margin expanded 110 basis points. For the total company, adjusted EBITDA margins expanded 20 basis points to 16.2%.

• 2025 Q1: Projected adjusted EPS of $0.76, 6% growth excluding FX, noting difficult comp to Q1 2024 due to lumpy defense orders.
• Full year 2025: Adjusted EBITDA range $540M-$570M, adjusted EPS range $2.70-$2.94, midpoint represents 11% growth excluding FX vs 2024.

• Macro uncertainties: Extent and timing of interest rate cuts, underlying performance of world economies, consumer sentiment, policy uncertainty and changes.
• Tariffs: ~5% of global raw material purchases at risk, but majority sourced from other countries, though broader impact on global demand is uncertain.

Q: Frank Mitsch asked about the Generation 3 Dyneema product and Defense segment performance.

A: Ashish Khandpur said the innovation is patent-protected, helps maintain margins, and is being commercialized. Defense had a lumpy Q1 2024 with heavy orders, creating a comp headwind.

Q: Michael Harrison asked about SAP S/4HANA implementation.

A: Ashish Khandpur said the project was more complex and costly than envisioned, so they seized implementation and will use alternative solutions for faster benefits.

Q: Michael Harrison asked about health care segment strength.

A: Ashish Khandpur said health care had double-digit growth in 2024 and Q4, driven by new business wins in remote monitoring, injector pens, and restocking.

Q: YIfei Huang asked about Defense guidance and 2026.

A: Ashish Khandpur said 2025 Defense growth is mid-single digit, and 2026 is hard to speculate as it's lumpy.

Q: Michael Sison asked about FX headwind and manufacturing in U.S.

A: Jamie Beggs said ~$0.12 EPS headwind from FX, and more U.S. manufacturing could reduce FX exposure. Ashish Khandpur added it should be positive as they can serve customers faster without FX exposure.

Q: Kristen Owen asked about new compensation strategy.

A: Ashish Khandpur said the new plan aligns incentives based on business life cycles, rewarding different behaviors for growth, income, etc.

Q: Kevin Estok asked about China demand and auto.

A: Ashish Khandpur said China had 7% organic growth in Q4, good for digital economy and EVs, with auto showing mid-single digit volume production growth.