Avient Corporation Q1 FY2026 earnings call

• CFO leadership change: Jamie Beggs left, Joe DiSalvo took on CFO role. - First quarter results: 83 cents of adjusted EPS, sales generally in line with expectations, adjusted EBITDA margins expanded by 20 basis points. - End market trends: Packaging shows resilience with mid to high single-digit growth expected in Q2; consumer expected to return to low single-digit growth; healthcare had low single-digit growth in Q1; defense sales expected to grow sequentially in Q2; building and construction was a bright spot; industrial transportation and energy market demand slow. - Innovation: Focus on electronics and high performance computing space, with materials solutions for semiconductor fabs, data center servers, and cabling.

Color, additives, and ink segment: Organic sales declined 3% during the quarter, EBITDA margins improved 40 basis points. Specialty engineered materials organic sales were flat, EBITDA margins declined 40 basis points due to unfavorable mix but were offset by productivity initiatives. U.S. Canada sales declined 3% due to timing of defense orders and slow transportation demand. EMEA organic sales were down 2% year-over-year. Asia grew 2% driven by packaging and telecommunications. Latin America sales declined 6% lapping strong growth from the prior year.

• Maintaining full year guidance: Adjusted EBITDA of $555 million to $585 million (2% to 7% growth over prior year), adjusted EPS of $2.93 to $3.17 (4% to 12% growth over prior year). - Second quarter adjusted EPS outlook of $0.89. - Expect to generate more than $200 million of free cash flow this year.

• Geopolitical events in the Middle East increase market volatility and customer purchasing behavior. - Uncertainty around the second half of the year remains elevated. - Supply chain constraints and inflationary pressures in the second quarter.

Q: Asked about raw material inflation and price expectations.

A: Hydrocarbons have 20% to 60% price increases, specialty materials and minerals have high single-digit increases, freight has almost 20% increases. Teams move aggressively with price increases.

Q: Asked about working capital and its impact.

A: Working capital typically ranges between 13% and 14% of sales, Q1 is more seasonal.

Q: Asked about organic sales growth in Q2 and volume.

A: Volumes down about 2% in Q1, similar range expected for Q2, organic growth driven by price.

Q: Asked about ability to stay ahead of raw materials inflation.

A: Differentiated from commodity resin manufacturers, less than 5% of agreements indexed, teams have proven playbook.

Q: Asked about volume assumptions for 2026 and macro economic deterioration.

A: Slightly positive volume for the year, low single digit increase driven by price and mix.

Q: Asked about packaging market optimism.

A: Packaging showing demand recovery, share gains, and new product innovation.

Q: Asked about raising prices and impact on volume.

A: Teams do a good job of staying with price, customers trust due to value creation.

Q: Asked about inflation flowing through to consumer and impact on demand.

A: Inflation flowing through, consumer and industrial businesses are question marks in second half.

Q: Asked about competitive advantage in electronics and high-performance computing space.

A: Speed and solving customer problems are competitive advantages, playing across value chain.

Q: Asked about productivity improvements and SG&A costs.

A: Productivity is a muscle, looking at sourcing, footprint optimization, manufacturing programs, and SG&A streamlining.

Q: Asked about packaging growth drivers and price mix.

A: Packaging growth driven by market demand, share gains, and pricing, price mix ramps with underlying input costs.

Q: Asked about pull through in March and visibility into Q2.

A: Q1 had some pull in, Q2 expected to have more impact of price increases and pre-buy-ins, monitoring customer order patterns.