AVIENT CORP
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
AVNT$45.47+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0001122976-24-000033
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001122976-24-000057
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 72 current paragraphs.
45 unchanged; 14 reworded; 13 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Sales increased $25.3 million, or 3.1%, and $8.6 million, or 0.5%, for the three and six months ended June 30, 2024, respectively, primarily driven by new business wins and restocking, partially offset by unfavorable foreign currency impacts of 1.5% and 1.0%, respectively.
Current report
Gross margin as a percentage of sales was 31.9% for the six months ended June 30, 2024 compared to 29.2% for the six months ended June 30, 2023. The gross margin improvement was driven primarily by the benefit from raw material deflation, mix improvement and lower restructuring charges of $11.6 million, offset by higher environmental remediation costs of $11.4 million.
Current report
Selling and administrative expense increased $6.7 million for the three months ended June 30, 2024, primarily driven by higher employee costs. Selling and administrative expense increased $0.4 million for the six months ended June 30, 2024, primarily driven by higher employee costs, which more than offset lower restructuring charges of $10.9 million.
Current report
During the three and six months ended June 30, 2024, the Company’s effective tax rate was 24.9% and 25.1%, respectively, compared to 31.8% and 29.3% for the three and six months ended June 30, 2023. The lower effective tax rate in 2024 is primarily driven by lower foreign valuation allowances and the rate impact associated with global intangible low-taxed income, partially offset by unfavorable foreign discrete items.
Current report
Sales increased $17.5 million, or 3.3%, for the three months ended June 30, 2024, primarily driven by new business wins and restocking in packaging, consumer, and building and construction markets, partially offset by an unfavorable foreign currency impact of 1.6%. Sales decreased $4.2 million, or 0.4%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily driven by an unfavorable foreign currency impact of 0.9%, which more than offset increased demand in the packaging and building and construction end markets.
Current report
Operating income increased $18.1 million and $27.3 million for the three and six months ended June 30, 2024, respectively, driven primarily by the impacts of the aforementioned sales increase and raw material deflation.
Current report
Sales increased $7.3 million, or 2.4%, and $12.0 million, or 2.0%, for the three and six months ended June 30, 2024, respectively, primarily driven by increased demand in defense, as well as new business wins and customer restocking in the consumer, healthcare, and building and construction end markets, partially offset by demand weakness in the telecommunications and energy markets and unfavorable foreign currency impacts of 1.4% and 1.0%, respectively.
Current report
Operating income increased $3.1 million and $13.4 million for the three and six months ended June 30, 2024, respectively, primarily due to the impacts of increased sales, mix improvement and raw material deflation.
Current report
Corporate costs increased $11.0 million for the three months ended June 30, 2024, primarily driven by $8.8 million of higher environmental remediation costs. Corporate costs decreased $6.4 million for the six months ended June 30, 2024 primarily driven by $22.5 million of lower restructuring charges, partially offset by $11.4 million of higher environmental remediation costs and higher employee costs.
Current report
Operating Activities —Net cash provided by operating activities increased $87.8 million during the six months ended June 30, 2024 compared to the six months ended June 30, 2023, driven primarily by higher current year earnings and lower tax payments as 2023 included tax payments associated with the gain on sale of our Distribution business.
Current report
On April 9, 2024, the Company refinanced its senior secured term loan by amending the credit agreement governing such term loan (the "Term Loan Amendment"). The amendment reduced the interest rates per annum by 50 basis points, which now are either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 2.00%, or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 1.00%. The maturity date and other terms and conditions are substantially the same as the terms and conditions under the credit agreement immediately prior to the Term Loan Amendment.
Current report
We expect to maintain or have access to sufficient liquidity to retire or refinance long-term debt at maturity or otherwise from cash from operations, access to the capital markets, and our revolving credit facility, including our $650.0 million aggregate principal amount of senior notes due in May 2025. We continuously evaluate opportunities to refinance our debt; however, any refinancing is subject to market conditions and other factors, including financing options that may be available to us.
Current report
17 AVIENT CORPORATION
Removed paragraphs (9)
Previous report
Sales decreased $16.7 million or 2.0% in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by lower sales in Europe, partially offset by increased demand in the defense end market.
Previous report
Selling and administrative expense decreased $6.3 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by lower restructuring charges which were partially offset by increased employee costs.
Previous report
During the three months ended March 31, 2024, the Company’s effective tax rate was 25.3% versus 26.6% for the three months ended March 31, 2023. The income tax rate decrease is primarily due to the lower tax expense associated with valuation allowances partially offset by unfavorable rate impacts associated with foreign earnings mix and permanent items for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Previous report
Sales decreased $21.7 million, or 4.0%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven by lower demand, primarily in Europe.
Previous report
Operating income increased $9.2 million, or 14.0%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to benefits from raw material deflation, which more than offset lower European demand.
Previous report
Sales increased $4.7 million, or 1.5%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by increased demand for defense applications, which was partially offset by demand weakness in the telecommunications end market and unfavorable foreign exchange rates, which had an impact of 0.7%
Previous report
Operating income increased $10.3 million, or 23.9%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to increased demand noted above, mix improvement and benefits from raw material deflation.
Previous report
Corporate costs decreased $17.4 million, or 33.7%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to $20.8 million of lower restructuring charges.
Previous report
Operating Activities —Net cash used by operating activities increased $20.6 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 as a $43.8 million investment in working capital was partially offset by $29.3 million of higher earnings.
Reworded paragraphs (14)
Previous wording
Results of Operations — The three months ended March 31, 2024 compared to three months ended March 31, 2023:
Current wording
Results of Operations — The three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:
Previous wording
Gross margin as a percentage of sales was 33.6% for the three months ended March 31, 2024 compared to 29.3% for the three months ended March 31, 2023. The gross margin improvement was driven primarily by the benefit from raw material deflation, lower restructuring charges and mix improvement.
Current wording
Gross margin as a percentage of sales was 30.3% for the three months ended June 30, 2024 compared to 29.2% for the three months ended June 30, 2023. The gross margin improvement was driven primarily by the benefit from raw material deflation and mix improvement, which more than offset higher environmental remediation costs of $8.8 million.
Previous wording
Interest expense, net decreased $2.2 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by the partial principal prepayment and refinancing of our senior secured term loans during the third quarter of 2023.
Current wording
Interest expense, net decreased $2.8 million and $5.0 million for the three and six months ended June 30, 2024, respectively, primarily driven by the refinancing of our senior secured term loans in April 2024 and August 2023, which included a partial principal prepayment of $102.3 million during the third quarter of 2023.
Previous wording
Operating income is the primary measure that is reported to our chief operating decision maker (CODM) for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative costs that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives, such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant closure and phase-in costs; costs incurred directly in relation to acquisitions or divestitures; integration costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, and other liabilities for facilities no longer owned or closed in prior years; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate.
Current wording
Operating income is the primary measure that is reported to our chief operating decision maker (CODM) for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives, such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant closure and phase-in costs; costs incurred directly in relation to acquisitions or divestitures; integration costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, and other liabilities for facilities no longer owned or closed in prior years; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate.
Previous wording
Sales and Operating Income —The three months ended March 31, 2024 compared to the three months ended March 31, 2023:
Current wording
Sales and Operating Income —The three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:
Previous wording
As of March 31, 2024, approximately 77% of the Company’s cash and cash equivalents resided outside the United States.
Current wording
As of June 30, 2024, approximately 63% of the Company’s cash and cash equivalents resided outside the United States.
Previous wording
The following describes the significant components of cash flows from operating, investing and financing activities for the three months ended March 31, 2024 and 2023.
Current wording
The following describes the significant components of cash flows from operating, investing and financing activities for the six months ended June 30, 2024 and 2023.
Previous wording
Investing Activities —Net cash used by investing activities during the three months ended March 31, 2024 of $24.5 million primarily reflects the impact of capital expenditures.
Current wording
Investing Activities —Net cash used by investing activities during the six months ended June 30, 2024 of $54.5 million primarily reflects the impact of capital expenditures.
Previous wording
Net cash used by investing activities during the three months ended March 31, 2023 of $13.0 million reflects the impact of capital expenditures of $20.3 million, offset by proceeds received from the divestiture of the Distribution business of $7.3 million.
Current wording
Net cash used by investing activities during the six months ended June 30, 2023 of $38.6 million reflects the impact of capital expenditures of $45.9 million, offset by proceeds received from the divestiture of the Distribution business of $7.3 million.
Previous wording
Financing Activities —Net cash used by financing activities for the three months ended March 31, 2024 of $28.1 million primarily reflects $23.5 million of dividends paid.
Current wording
Financing Activities —Net cash used by financing activities for the six months ended June 30, 2024 of $54.8 million primarily reflects $47.0 million of dividends paid.
Previous wording
Net cash used by financing activities for the three months ended March 31, 2023 of $25.6 million primarily reflects $22.5 million of dividends paid.
Current wording
Net cash used by financing activities for the six months ended June 30, 2023 of $48.3 million primarily reflects $45.0 million of dividends paid.
Previous wording
As of March 31, 2024, our principal amount of debt totaled $2,107.8 million. Aggregate maturities of the principal amount of debt for the current year, next four years and thereafter, are as follows:
Current wording
As of June 30, 2024, our principal amount of debt totaled $2,105.7 million. Aggregate maturities of the principal amount of debt for the current year, next four years and thereafter, are as follows:
Previous wording
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations. During the three months ended March 31, 2024, there were no material changes to these obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans, environmental remediation and purchase obligations. During the six months ended June 30, 2024, we recorded adjustments to the Calvert City environmental remediation accrual. For additional information, please see Note 10, Commitments and Contingencies to the accompanying condensed consolidated financial statements. There were no other material changes to these obligations as reported in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous wording
•our ability to achieve strategic objectives and successfully integrate acquisitions, including the implementation of a cloud-based enterprise resource planning (ERP) system, S/4HANA;
Current wording
•our ability to achieve strategic objectives and successfully integrate acquisitions, including the implementation of a cloud-based enterprise resource planning system, S/4HANA;