Avient Corporation Q4 FY2025 earnings call

• Strong execution led to 80 basis points of adjusted EBITDA margin expansion and 14% adjusted EPS growth in Q4 2025; full-year 2025 saw 50 basis points of adjusted EBITDA margin expansion, reaching record high margins of 16.7%.
• Organic sales in Q4 2025 were down slightly but up 1.9% year-over-year due to favorable foreign exchange; full-year sales were relatively flat.
• Innovation highlights include non-PFAS products for catheters and packaging, and process innovation for Dyneema fibers.
• Strategy focused on organic growth, innovation, and productivity; over the last two years, adjusted EPS grew ~20%, adjusted EBITDA margins expanded 70 basis points, and net leverage improved from 3.1x to 2.6x.

Color Additives and Inks (CAI) Segment

• Fourth Quarter 2025: Organic sales declined 3% due to weak demand in consumer, industrial, and building & construction; EBITDA margins decreased 10 basis points.
• Full Year 2025: Organic sales declined 2%; EBITDA margins expanded 50 basis points, aided by favorable mix and productivity tied to plant footprint optimization.

Specialty Engineered Materials (SEM) Segment

• Fourth Quarter 2025: Organic sales increased 3% driven by strong growth in defense, healthcare, and telecommunications; EBITDA margins expanded 80 basis points.
• Full Year 2025: Organic sales grew 2%; EBITDA margins declined 40 basis points due to planned maintenance and strategic investments in growth vectors.

• 2026 adjusted EBITDA guidance: $555,000,000 to $585,000,000 (up 2% to 7% YOY).
• 2026 adjusted EPS guidance: $2.93 to $3.17 (up 4% to 12% YOY).
• Full-year free cash flow expected: $200,000,000 to $220,000,000.
• Capital expenditures for 2026: ~$140,000,000, ~$33,000,000 more than 2025, driven by investments in defense growth.

• Volatile macro environment impacted by trade policies, geopolitics, and supply chain shifts.
• Uncertainty in global trade, labor markets, GDP growth rates, and foreign currency fluctuations.

Q: Are you seeing green shoots in consumer, industrial, transportation, and construction areas?

A: Part of the improvement is seen in the U.S., with packaging expected to flip from negative to positive in Q1; consumer is subdued but improving. The guidance range captures different growth scenarios from no improvement to robust growth.

Q: How much growth will be generated from innovation initiatives in 2026?

A: Growth vectors grew high single digits in 2025, and with over 50 patents filed in the last two years, innovation is driving growth in markets supported by secular trends.

Q: What is driving Asia's organic growth in Q4 2025?

A: Asia's growth in Q4 is due to gains in market share in food and beverage packaging and growth in high performance computing materials used in semiconductor chip packaging.