AVIENT CORP
For the period ended Sep 30, 2024. Filed Nov 5, 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.
Sep 30, 2024 · Filed Nov 5, 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 2024-06-30; filed 2024-08-06.
0001122976-24-000057
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001122976-24-000066
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 72 previous paragraphs and 74 current paragraphs.
45 unchanged; 21 reworded; 8 added; 6 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 (8)
Current report
Sales increased $61.5 million, or 8.2%, and $70.1 million, or 2.9%, for the three and nine months ended September 30, 2024, respectively, primarily driven by increased demand. Demand increases were driven by the consumer, packaging, healthcare, defense and building and construction end markets, partially offset by weakness in the transportation and telecommunications end markets. There were unfavorable foreign currency impacts of 0.4% and 0.9% for the three and nine months ended September 30, 2024, respectively.
Current report
During the three months ended September 30, 2024, the Company’s effective tax rate was 22.5% compared to a benefit of 3.1% for the three months ended September 30, 2023. The higher effective tax rate in 2024 compared to 2023 was primarily driven by the favorable return-to-provision adjustment related to a capital loss deduction in 2023 not repeating in 2024.
Current report
During the nine months ended September 30, 2024, the Company’s effective tax rate was 24.3% compared to 26.9% for the nine months ended September 30, 2023. The lower effective tax rate in 2024 was primarily driven by lower foreign valuation allowances in 2024. This was partially offset by the favorable return-to-provision adjustment related to a capital loss deduction in 2023 not repeating in 2024.
Current report
Sales increased $26.7 million, or 10.0%, and $38.7 million, or 4.4%, for the three and nine months ended September 30, 2024, respectively, primarily driven by increased demand in defense, building and construction, consumer and healthcare end markets. This was partially offset by demand weakness in the telecommunications and transportation end markets. There was an unfavorable foreign currency impact of 0.7% for the nine months ended September 30, 2024.
Current report
Financing Activities —Net cash used by financing activities for the nine months ended September 30, 2024 of $93.8 million primarily reflects payment on long-term borrowings of $659.1 million, $70.5 million of dividends paid and $9.6 million of debt financing costs, partially offset by $650.0 million of proceeds from long-term borrowings.
Current report
On September 19, 2024, the Company completed the issuance of $650.0 million in 6.250% Senior Notes which will mature on November 1, 2031 (the "2031 Notes"). The Company received proceeds of $641.9 million, net of financing costs, related to the issuance. Interest on the 2031 Notes is payable semi-annually in arrears on May 1 and November 1 of each year, commencing on May 1, 2025. The 2031 Notes were sold in a private offering and are senior unsecured obligations of the Company.
Current report
Proceeds from the 2031 Notes and cash on hand were used to fully redeem the $650.0 million outstanding of the Company's 5.750% Senior Notes due May 15, 2025. The notes were redeemed at a redemption price equal to 100.0% of the principal amount.
Current report
18 AVIENT CORPORATION
Removed paragraphs (6)
Previous 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.
Previous report
12 AVIENT CORPORATION
Previous 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.
Previous 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.
Previous report
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 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.
Reworded paragraphs (21)
Previous wording
Results of Operations — The three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:
Current wording
Results of Operations — The three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:
Previous wording
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 wording
Gross margin as a percentage of sales was 32.1% for the three months ended September 30, 2024 compared to 25.9% for the three months ended September 30, 2023. The gross margin improvement was driven primarily by the benefit from raw material deflation, mix improvement, lower environmental remediation costs of $35.7 million and lower restructuring charges of $3.9 million.
Previous 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.
Current wording
Gross margin as a percentage of sales was 32.0% for the nine months ended September 30, 2024 compared to 28.2% for the nine months ended September 30, 2023. The gross margin improvement was driven primarily by the benefit from raw material deflation, mix improvement, lower environmental remediation costs of $24.3 million and lower restructuring charges of $15.5 million.
Previous wording
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 wording
Selling and administrative expense increased $23.2 million for the three months ended September 30, 2024, primarily driven by higher employee costs. Selling and administrative expense increased $23.6 million for the nine months ended September 30, 2024, primarily driven by higher employee costs, which more than offset lower restructuring charges of $7.2 million.
Previous 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.
Current wording
Interest expense, net decreased $3.4 million and $8.4 million for the three and nine months ended September 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
Sales and Operating Income —The three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023:
Current wording
Sales and Operating Income —The three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023:
Previous wording
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 wording
Sales increased $35.0 million, or 7.2%, for the three months ended September 30, 2024, primarily driven by increased demand in the packaging, consumer, healthcare and building and construction end markets, partially offset by weakness in the transportation end market and an unfavorable foreign currency impact of 0.5%. Sales increased $30.8 million, or 2.0%, in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by increased demand in the packaging, consumer and building and construction end markets, partially offset by an unfavorable foreign currency impact of 0.8%.
Previous wording
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 wording
Operating income increased $11.0 million and $38.3 million for the three and nine months ended September 30, 2024, respectively, driven primarily by the impacts of the aforementioned sales increase and margin improvement associated with raw material deflation.
Previous wording
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 wording
Operating income increased $6.1 million and $19.5 million for the three and nine months ended September 30, 2024, respectively, primarily due to the impacts of increased sales and mix improvement.
Previous wording
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 wording
Corporate costs decreased $25.8 million for the three months ended September 30, 2024, primarily driven by $35.7 million of lower environmental remediation costs, partially offset by higher employee costs. Corporate costs decreased $32.2 million for the nine months ended September 30, 2024 primarily driven by $24.3 million of lower environmental remediation costs and $22.7 million of lower restructuring charges, partially offset by higher employee costs.
Previous wording
As of June 30, 2024, approximately 63% of the Company’s cash and cash equivalents resided outside the United States.
Current wording
As of September 30, 2024, approximately 82% of the Company’s cash and cash equivalents resided outside the United States.
Previous wording
Expected sources of cash needed to satisfy cash requirements for 2024 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if necessary. We believe that these sources will provide sufficient liquidity to satisfy our expected uses of cash for at least the next twelve months and the foreseeable future thereafter. Expected uses of cash for 2024 include interest payments, cash taxes, dividend payments, environmental remediation costs and capital expenditures.
Current wording
Expected sources of cash needed to satisfy cash requirements for the remainder of 2024 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if necessary. We believe that these sources will also provide sufficient liquidity to satisfy our expected uses of cash for at least the next twelve months and the foreseeable future thereafter. Expected uses of cash for the remainder of 2024 include interest payments, cash taxes, dividend payments, environmental remediation costs, capital expenditures and S/4HANA development costs.
Previous 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.
Current wording
The following describes the significant components of cash flows from operating, investing and financing activities for the nine months ended September 30, 2024 and 2023.
Previous wording
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 wording
Operating Activities —Net cash provided by operating activities increased $87.1 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven primarily by higher current year earnings and lower tax payments as 2023 included tax payments of $104.1 million associated with the gain on sale of our Distribution business, partially offset by an increased investment in working capital.
Previous 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.
Current wording
Investing Activities —Net cash used by investing activities during the nine months ended September 30, 2024 of $79.5 million primarily reflects the impact of capital expenditures.
Previous 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.
Current wording
Net cash used by investing activities during the nine months ended September 30, 2023 of $65.4 million primarily reflects the impact of capital expenditures of $75.0 million, partially offset by proceeds received from the divestiture of the Distribution business of $7.3 million.
Previous 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.
Current wording
Net cash used by financing activities for the nine months ended September 30, 2023 of $176.0 million primarily reflects payment on long-term borrowings of $103.8 million and $67.6 million of dividends paid.
Previous 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:
Current wording
As of September 30, 2024, aggregate maturities of the principal amount of debt for the current year, next four years and thereafter, are as follows:
Previous wording
As of June 30, 2024, we were in compliance with all financial and restrictive covenants pertaining to our debt. For additional information regarding our debt, please see Note 7, Financing Arrangementsto the accompanying condensed consolidated financial statements.
Current wording
As of September 30, 2024, we were in compliance with all financial and restrictive covenants pertaining to our debt. For additional information regarding our debt, please see Note 7, Financing Arrangements, to the accompanying condensed consolidated financial statements.
Previous wording
We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. For additional information regarding our derivative instruments, please see Note 8, Derivatives and Hedgingto the accompanying condensed consolidated financial statements.
Current wording
We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. For additional information regarding our derivative instruments, please see Note 8, Derivatives and Hedging, to the accompanying condensed consolidated financial statements.
Previous 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.
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 nine months ended September 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.