AVIENT CORP
For the period ended Dec 31, 2024. Filed Feb 18, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 18, 2025
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-K
Period ended 2023-12-31; filed 2024-02-20.
0001122976-24-000019
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-18.
0001122976-25-000008
Item 7. 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 118 previous paragraphs and 114 current paragraphs.
70 unchanged; 21 reworded; 22 added; 27 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 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 (22)
Current report
In 2024, we developed a refined strategy for the Avient of the future. It begins with our purpose: to be an innovator of materials solutions to help our customers succeed, while enabling a sustainable world. We have a two-pronged strategic approach, where we seek to intersect high-growth markets and secular trends with our technologies to 1) build new platforms of scale by playing bigger and bolder in high growth markets, and 2) catalyze the core of our business, maximizing the impact of what we have. Our strategy utilizes four supporting strategic drivers: Portfolio Prioritization; Amplify Innovation; Digital for Operational Excellence and Growth; and Leadership, Talent and Culture for the Avient of the Future. All of this is underpinned by the established foundational strengths of Avient, which have been built and refined over the 25-year history of the company.
Current report
Subsequent Events
Current report
In the first quarter of 2025, the Company completed a review of the cloud-based enterprise resource planning system, S/4HANA, including updated project timelines, cost incurred to date, required internal resources and expected costs to complete the initial site implementations, and the evolution of options that could provide better returns for shareholders. As a result of this review, the Company determined it would cease the ongoing development of S/4HANA and re-allocate capital to other projects which will support the Company’s new strategy.
Current report
As a result of this decision, the Company will recognize a non-cash, pre-tax impairment charge of approximately $71 million, associated with capitalized implementation costs. The Company will also recognize pre-tax charges of approximately $15 million associated with unpaid contractual obligations for hosting fees within its Consolidated Statements of Income in the first quarter of 2025.
Current report
Sales increased $97.6 million, or 3.1%, in 2024 compared to 2023, primarily driven by increased demand of 4.0%, partially offset by unfavorable foreign currency impacts of 0.9%. Increased demand was driven by strength in the consumer, defense, building and construction, packaging and healthcare end markets, partially offset by weakness in the telecommunications and transportation end markets.
Current report
Gross margin increased to 32.6% from 28.4% in 2024 compared to 2023, primarily driven by the benefits of raw material deflation, mix improvement, lower environmental remediation costs of $34.6 million, and lower restructuring charges of $12.9 million. Further, in 2024, Avient recognized a gain from insurance recoveries associated with previously incurred environmental remediation costs of $34.7 million as compared to a gain of $1.7 million in 2023.
Current report
Interest expense, net decreased $9.7 million in 2024 as compared to 2023, primarily due to the refinancing of our senior secured term loans in April 2024 and August 2023, which included a partial principal repayment of $102.3 million during the third quarter of 2023.
Current report
Other income (expense), net decreased $4.7 million in 2024 as compared to 2023, primarily associated with $6.3 million in amortization of prior service credits associated with the phase out of certain post-employment benefits in 2023.
Current report
The consolidated effective income tax rate from continuing operations was 24.1%, which was higher than the U.S. federal rate of 21%. This higher rate was primarily driven by U.S. permanent items of 2.1%, international rate differential of 1.7% and tax associated with foreign income repatriation of 1.6%. These items were partially offset by credits associated with research and development of 1.7% and changes in uncertain tax position which resulted in a net benefit of 1.1%.
Current report
Sales increased $39.1 million, or 1.9%, in 2024 compared to 2023, primarily driven by increased demand of 2.9%, partially offset by unfavorable foreign currency impacts of 0.9%. Increased demand was driven by strength in the packaging, consumer, healthcare and building and construction end markets, partially offset by weakness in the transportation end market.
Current report
Operating income increased $36.3 million, or 14.0%, in 2024 compared to 2023, primarily driven by increased sales and benefits from raw material deflation, which occurred in the first half of 2024, partially offset by higher employee related costs and unfavorable foreign currency impacts.
Current report
Sales increased by $58.6 million, or 5.1%, in 2024 compared to 2023, primarily driven by increased demand of 6.1%, partially offset by an unfavorable foreign currency impact of 0.7%. Increased demand was driven by strength in the defense, building and construction, consumer and healthcare end markets, partially offset by weakness in the telecommunications end market.
Current report
Operating income increased by $24.7 million, or 17.3%, in 2024 compared to 2023, primarily driven by increased sales, benefits from raw material deflation, which occurred in the first half of 2024, and favorable product mix, partially offset by higher employee related costs and unfavorable foreign currency impacts.
Current report
Costs decreased $71.5 million, or 34.8%, in 2024 compared to 2023, primarily driven by $34.6 million of lower environmental remediation costs in 2024 compared to 2023, while gains from insurance recoveries associated with previously incurred environmental remediation costs were $33.0 million higher in 2024 compared to 2023. Further, lower restructuring costs of $21.9 million in 2024 more than offset higher employee related costs in 2024.
Current report
Net cash provided by operating activities increased to $256.8 million in 2024, as compared to $201.6 million in 2023, driven primarily by higher earnings and lower tax payments as 2023 included tax payments of $104.1 million associated with the gain on sale of our Distribution business. This was partially offset by an increase in working capital of $28.6 million as compared to a decrease of $40.7 million in 2023, a $15.4 million increase in environmental remediation payments, and $21.1 million of higher benefit payments associated with executive retirements.
Current report
Net cash used by financing activities of $120.9 million in 2024 primarily reflects repayment on long-term borrowings of $660.9 million, $94.0 million of dividends paid and $9.6 million of debt financing costs, partially offset by $650.0 million of proceeds received from long-term borrowings.
Current report
On September 19, 2024, the Company completed the issuance of $650.0 million aggregate principal amount of 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 aggregate principal amount 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
In 2023, the annual goodwill impairment test was performed using a quantitative approach. In 2024, the Company performed a qualitative approach, including assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data and other relevant qualitative factors. These trends and factors were compared to the assumptions used in the 2023 quantitative analysis for each reporting unit. The results of the qualitative assessment did not indicate a need to perform a quantitative analysis.
Current report
Based on the results of our impairment analysis, the Company concluded the fair value of its reporting units continued to exceed their respective carrying value.
Current report
In 2023, the indefinite-lived intangible asset impairment tests were performed using a quantitative approach. In 2024, the Company performed both qualitative and quantitative approaches. The qualitative approach includes assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales, discount rates, other relevant qualitative factors. These trends and factors were compared to the assumptions used in the 2023 quantitative analysis. The quantitative analysis was performed by estimating the fair value of the indefinite-lived trade name using a royalty relief methodology. This analysis includes estimates of future cash flows that are based on the Company's long-term strategic plan and the applicable weighted-average cost of capital used to discount estimated cash flows.
Current report
Based on the results of our impairment analysis, the Company concluded the fair value of its trade names continued to exceed their respective carrying value.
Removed paragraphs (27)
Previous report
To achieve our vision, we have implemented a strategy with four core components: specialization, globalization, operational excellence and commercial excellence. Specialization differentiates us through products, services, technology and solutions that add value. Globalization allows us to service our customers with consistency wherever their operations might be around the world. Operational Excellence empowers us to respond to the voice of the customer while focusing on continuous improvement. Commercial Excellence enables us to deliver value to customers by supporting their growth and profitability with superior customer service.
Previous report
In addition, we continue to engage and invest in the Alliance to End Plastic Waste (AEPW). Avient joined the AEPW as a founding member, along with 29 other member companies, in January 2019. As of December 31, 2023, the AEPW had committed over $1.5 billion to help end plastic waste in the environment through investment in infrastructure, innovation, education, and clean-up activities. Our commitment to AEPW is yet another example of the importance we place on being a global leader in all aspects of how we define sustainability: People, Products, Planet and Performance.
Previous report
We have identified four key growth drivers to drive profitable, organic sales growth: sustainable solutions, composites, healthcare and emerging regions. We also focus on accelerating the launch of new products and collaborating with our customers to develop new and unique solutions for their benefit while focusing on our four cornerstones of sustainability to ensure the growth we achieve is sustainable for us and our customers. Capital expenditures will be focused primarily to support sales growth, investment in recent acquisitions, and other strategic investments. We also continue to consider acquisitions and other synergy opportunities that complement our core platforms. These actions will enable us to continue to invest in our core capabilities and continue to support growth in key markets and product offerings.
Previous report
Recent Developments
Previous report
APM Acquisition
Previous report
On September 1, 2022, the Company completed the acquisition of the DSM Protective Materials business, including the Dyneema® brand, the World's Strongest Fiber™. The ultra-light specialty fiber is used in demanding applications such as ballistic personal protection, marine and sustainable infrastructure, renewable energy, industrial protection and outdoor sports. The acquired business is collectively referred to as APM, and the acquisition is referred to as the APM Acquisition. The APM Acquisition enhances Avient's materials offerings of composites and engineered fibers. Total consideration paid by the Company was $1.4 billion, net of cash acquired.
Previous report
Distribution business sale
Previous report
On November 1, 2022, Avient sold its Distribution business to an affiliate of H.I.G. Capital for $950.0 million in cash, subject to a customary working capital adjustment. Total proceeds were $935.5 million, of which $7.3 million was received in the year ended December 31, 2023. The results of the Distribution business are presented as discontinued operations for all periods presented.
Previous report
Sales decreased $254.1 million, or 7.5%, in 2023 compared to 2022. The APM Acquisition, which began to be reflected in results as of September 1, 2022, increased sales by 7.4%, which was more than offset by the impacts of lower global demand and customer destocking. In addition, unfavorable foreign exchange rates had a 0.8% impact.
Previous report
Gross margin as a percentage of sales was 28.4% in 2023 as compared to 26.0% in 2022. The gross margin improvement was driven primarily by favorable price and mix, including a full year of APM results in 2023, and raw material deflation. Further, 2023 included $52.1 million of higher environmental remediation costs, while 2022 included $34.4 million of expense associated with the APM Acquisition purchase accounting inventory step-up and $19.2 million of higher restructuring costs.
Previous report
Interest expense, net decreased $4.5 million in 2023 as compared to 2022. Higher interest expense related to new debt incurred to finance the APM Acquisition and the impact of higher interest rates on our variable term debt was partially offset by $15.8 million of higher interest income from cash equivalents and cross-currency swaps. Additional reductions resulted from $10.0 million of committed financing costs incurred in 2022 associated with the APM Acquisition along with a $13.7 million reduction in other debt financing costs.
Previous report
Other income (expense), net resulted in income in 2023 primarily related to a $32.3 million year-over-year change in the mark-to-market expense associated with pension and post-retirement plans. In addition, 2022 included a $30.9 million mark-to-market loss on derivative contracts entered into to hedge the purchase price of the APM Acquisition.
Previous report
The 2022 consolidated effective income tax rate from continuing operations was a benefit of 30.2%. We recognized a net tax benefit of 88.1% in 2022 from federal and state capital loss deductions associated with an international affiliate's tax status change. We also recognized a tax benefit of 5.5% associated with earnings in foreign jurisdictions with statutory rates below the U.S. federal income tax rate. Further, the state and local tax benefit was 4.0%, driven by a U.S. tax loss.
Previous report
Offsetting these benefits in 2022 were the tax impact of international permanent items of 12.1%, which primarily included an unfavorable tax effect of withholding taxes. We also increased our valuation allowance, which impacted the rate 15.4%, for deferred tax assets that are unlikely to create income tax benefits before their expiration. Further, uncertain tax positions increased, which impacted the rate 12.9%, primarily associated with European restructuring charges which are not expected to realize and a tax effect of non-deductible foreign interest of 2.9%.
Previous report
nm - not meaningful
Previous report
Sales decreased $347.6 million, or 14.8%, in 2023 compared to 2022, primarily driven by lower global demand and customer destocking.
Previous report
Operating income decreased $41.1 million, or 13.7%, in 2023 compared to 2022, primarily due to lower global demand, customer destocking and unfavorable foreign exchange rates, which had a 1.3% impact, partially offset by the carryforward of price increases, raw material deflation and cost reduction actions.
Previous report
Sales increased by $93.8 million, or 9.0%, in 2023 compared to 2022. The APM Acquisition, which began to be reflected in results as of September 1, 2022, increased sales by 24.2%, which was partially offset by the impacts of lower global demand and customer destocking.
Previous report
Operating income increased by $2.4 million, or 1.7%, in 2023 compared to 2022, driven primarily by the APM Acquisition, raw material deflation and cost reduction actions, partially offset by lower global demand, customer destocking and unfavorable foreign exchange rates, which had a 1.7% impact.
Previous report
Costs increased $7.8 million, or 3.9%, in 2023 compared to 2022, primarily driven by $52.1 million of higher environmental remediation costs in 2023 and $8.1 million of higher mark-to-market costs associated with Avient deferred compensation plans, partially offset by lower acquisition related expense of $47.5 million, which includes $34.4 million of expense associated with the APM inventory step-up, and $9.6 million of lower restructuring costs in 2023.
Previous report
In 2023, net cash provided by operating activities decreased to $201.6 million as compared to $398.4 million in 2022, driven primarily by lower earnings and taxes paid associated with the sale of the Distribution business, partially offset by a decrease in working capital.
Previous report
Net cash used by financing activities of $201.7 million in 2023 primarily reflects $105.8 million reduction in long-term debt and $90.2 million of dividends paid.
Previous report
(1)Total debt includes both the current and long-term portions of debt and capital lease obligations.
Previous report
(5)Includes estimated payments related to environmental remediation, primarily due to the ongoing remedial action at Calvert City.
Previous report
For additional information about the acquisitions of businesses see Note 2, Business Combinations.
Previous report
On October 1, 2023, we quantitatively tested goodwill as part of our annual goodwill impairment test. Based on the results of the test, the fair values for all of our reporting units exceeded the carrying values, and therefore there was no goodwill impairment. The APM reporting unit, included in the Specialty Engineered Materials segment, had a fair value that exceeded the carrying value by 7%. The fair value's close proximity to the carrying value was primarily due to the fact that the APM business was acquired approximately one year ago while interest rates have increased since the date of the acquisition which lowers the calculated fair value. Although we believe that the current assumptions and estimates are appropriate, the performance of this business could be impacted by negative or unforeseen changes in market factors and economic conditions, which could impact the valuation in the future. The carrying value of our APM reporting unit included goodwill of $447.2 million as of December 31, 2023.
Previous report
On October 1, 2023, we performed a quantitative impairment assessment of our indefinite-lived trade names using the royalty relief methodology. Based on the quantitative impairment assessment of our trade names, the fair value for all of our trade names exceeded their carrying value, and therefore there was no impairment of indefinite-lived trade names. The fair value of the Dyneema trade name, which is part of the APM reporting unit, exceeded the carrying value by 9%. Although we believe that the current assumptions and estimates are appropriate, the value of this trade name could be impacted by negative or unforeseen changes in market factors and economic conditions. The carrying value of the trade name is $281.2 million as of December 31, 2023.
Reworded paragraphs (21)
Previous wording
We are a premier formulator of specialized and sustainable materials solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Our products include specialty engineered materials, performance fibers, advanced composites, and color and additive systems. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants and fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, with 2023 sales of $3.1 billion from continuing operations, we have manufacturing and warehouses around the globe, with 61% of our sales to customers outside the United States. We provide value to our customers through our ability to link our knowledge of polymers and formulation technology with our manufacturing and supply chain capabilities to provide value-added solutions to designers, assemblers and processors of plastics.
Current wording
We are an innovator of materials solutions to help our customers succeed, while enabling a sustainable world. Our products include specialty engineered materials, performance fibers, advanced composites, and color and additive solutions. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants and silicone colorants. Headquartered in Avon Lake, Ohio, with 2024 sales of $3.2 billion from continuing operations, we have manufacturing and warehouses around the globe, with 60% of our sales to customers outside the United States. We provide value to our customers through our ability to link our knowledge of polymers and materials science with our manufacturing and supply chain capabilities to provide value-added solutions to designers, assemblers and processors of materials.
Previous wording
As Avient has evolved into a specialty materials company, we’ve continued to refine and increase our commitment to sustainability. Like all that we do, we start by putting our customers first, then look inward to make a difference. Our guiding principle of sustainability is to enable our customers’ innovation and sustainability goals through products and services. Our four cornerstones of People, Products, Planet and Performance guide our investments and actions, and we are making significant contributions in each. Examples of how our materials science is enabling sustainability for our customers include developing unique technologies that improve the recyclability of products and allow recycled content to be incorporated in products, thus advancing a more circular economy; light-weighting solutions that replace heavier traditional materials like metal, glass and wood, which can improve fuel efficiency in all modes of transportation and reduce carbon footprint; and sustainable infrastructure solutions that increase energy efficiency, renewable energy, natural resource conservation and fiber optic / 5G network accessibility.
Current wording
We maintain a strong commitment to sustainability. Like all that we do, we start by putting the safety of our employees and needs of our customers first, then look inward to make a difference. We offer a broad portfolio of technologies that are designed to help our customers succeed, while enabling a sustainable world. Through our design expertise and materials science, we seek to positively contribute to our customers’ products in many end markets. We have three overarching ways we help our customers meet their sustainability goals: Renew, Reduce, and Preserve. Examples include developing unique technologies that improve the recyclability of products and allow recycled content to be incorporated in products, thus advancing a more circular economy; light-weighting solutions that replace heavier traditional materials like metal, glass and wood, which can improve fuel efficiency in all modes of transportation and reduce the carbon footprint; and infrastructure solutions that are designed to increase energy efficiency, renewable energy, and natural resource conservation.
Previous wording
We will continue our enterprise-wide Lean Six Sigma program directed at improving margin, profitability and cash flow by applying proven management techniques and strategies to key areas of the business, such as pricing, supply chain and operations management, productivity and quality. Long-term trends that currently provide opportunities to leverage our strategy and commitment to sustainability include improving health and wellness, protecting the environment, globalizing and localizing and increasing energy efficiency. Examples of how our strategy supports these trends can be found in numerous initiatives: active participation in the medical device market, leveraging our global footprint to deliver consistent solutions globally, light weighting and metal replacement and development of solutions that respond to ever-changing market needs by offering alternatives to traditional materials.
Current wording
Long-term trends that currently provide opportunities to leverage our strategy include improving health and wellness, protecting the environment, and increasing need for power and electricity.
Previous wording
These costs include selling, technology, administrative functions, amortization of intangible assets, corporate and general expenses. Selling and administrative expense in 2023 increased $56.3 million compared to 2022, primarily driven by a full year of APM results and higher restructuring costs of $9.6 million in 2023.
Current wording
These costs include selling, technology, administrative functions, amortization of intangible assets, corporate and general expenses. Selling and administrative expense in 2024 increased $31.7 million compared to 2023, primarily due to higher employee related costs, partially offset by lower restructuring costs of $9.0 million.
Previous wording
The consolidated effective income tax rate from continuing operations was 12.6%, which was lower than the U.S. federal rate of 21%. This lower rate was primarily driven by the recognition of tax benefits of 7.5% associated with tax impairments of investments in affiliates, driven in part from European restructuring actions. Further, we recognized a 5.4% tax benefit from federal and state capital losses associated with an international affiliate's tax status change in 2022. Finally, we recognized tax benefits from the reduction of uncertain tax positions as well as the U.S. R&D tax credit, which reduced the tax rate, 5.3% and 3.7%, respectively. Partially offsetting these benefits were non-deductible foreign interest, 5.3%, tax associated with foreign income repatriation, 3.9%, and an increase of our valuation allowance which impacted the rate 3.6%.
Current wording
The 2023 consolidated effective income tax rate from continuing operations was 12.6%, which was lower than the U.S. federal rate of 21%. This lower rate was primarily driven by the recognition of tax benefits of 7.5% associated with tax impairments of investments in affiliates, driven in part from European restructuring actions. Further, we recognized a 5.4% tax benefit from federal and state capital losses associated with an international affiliate's tax status change in 2022. Finally, we recognized tax benefits from the reduction of uncertain tax positions as well as the U.S. R&D tax credit, which reduced the tax rate, 5.3% and 3.7%, respectively. Partially offsetting these benefits were non-deductible foreign interest, 5.3%, tax associated with foreign income repatriation, 3.9%, and an increase of our valuation allowance which impacted the rate 3.6%.
Previous wording
Operating income is the primary measure that is reported to our chief operating decision maker for purposes of making decisions about 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; 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 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 chief operating decision maker. 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 costs that are not allocated to segments, restructuring charges, environmental remediation obligations and associated recoveries, acquisition-related charges, mark-to-market adjustments on pension and other post-retirement obligations, 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
Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity. By laddering the maturity structure, we avoid concentrations of debt maturities, reducing liquidity risk. We may from time to time seek to retire or purchase our outstanding debt with cash and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our outstanding common shares. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved have been and may continue to be material.
Current wording
Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity. By laddering the maturity structure, we avoid concentrations of debt maturities, reducing liquidity risk. We may from time to time seek to retire or purchase our outstanding debt with cash on hand and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our outstanding common shares. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved have been and may continue to be material.
Previous wording
As of December 31, 2023, approximately 69% of the Company’s cash and cash equivalents resided outside the United States.
Current wording
As of December 31, 2024, 64% of the Company’s cash and cash equivalents resided outside the United States.
Previous wording
Expected sources of cash needed to satisfy cash requirements in 2024 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if necessary. Expected uses of cash in 2024 include interest payments, cash taxes, dividend payments, share repurchases, environmental remediation costs and capital expenditures. Capital expenditures are currently estimated to be approximately $140 million in 2024, primarily to support sales growth, our continued investment in recent acquisitions, including the implementation of a cloud-based ERP system, S/4HANA, and other strategic investments.
Current wording
Expected sources of cash needed to satisfy cash requirements in 2025 include our cash on hand, cash from operations, the receipt of $34.0 million of insurance recoveries, as described in Note 11, Commitments and Contingencies, and available liquidity under our revolving credit facility, if necessary. Expected uses of cash in 2025 include interest payments, cash taxes, dividend payments, share repurchases, environmental remediation payments and capital expenditures. Capital expenditures are currently estimated to be approximately $120 million in 2025, primarily to support organic sales growth and other strategic investments.
Previous wording
Net cash used by investing activities during 2023 of $94.2 million primarily reflects the impact of capital expenditures of $119.4 million, which were partially offset by the net proceeds from the sale of the Distribution business of $7.3 million, proceeds from plant closures of $7.6 million and other investing inflows of $10.3 million.
Current wording
Net cash used by investing activities during 2024 of $120.6 million primarily reflects the impact of capital expenditures.
Previous wording
On August 16, 2023, the Company refinanced its senior secured term loans by amending its Credit Agreement (the Term Loan Amendment). Pursuant to the Term Loan Amendment, Avient incurred a new tranche of Senior Secured Term Loan due 2029 in an aggregate principal amount of $731.6 million. The proceeds, together with $102.3 million of cash on hand, were used to settle all of the outstanding principal of previous tranches of senior secured term loans. The amendment aligned the maturity date for all of the Company’s term loan debt to August 29, 2029. The amendment also aligned and reduced the interest rates per annum, which now are either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 2.50%, or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 1.50%. We recognized $1.9 million related to the write-off of unamortized issuance costs and discounts within Interest expense, net for the year ended December 31, 2023 as a result of the amendment.
Current wording
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 Term Loan Amendment reduced the interest rates per annum by 50 basis points, which are now 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.
Previous wording
The Company maintains a senior secured revolving credit facility (the Revolving Credit Facility), which matures on October 26, 2026 and provides a maximum borrowing facility size of $500.0 million, subject to a borrowing base with advances against certain U.S. and international accounts receivable, inventory and other assets as specified in the agreement. As of December 31, 2023, we had no borrowings outstanding under our Revolving Credit Facility, which had remaining availability of $199.7 million. As of December 31, 2022, we had no borrowings under our Revolving Credit Facility, which had remaining availability of $246.2 million.
Current wording
The Company maintains a senior secured revolving credit facility (the Revolving Credit Facility), which matures on October 26, 2026 and provides a maximum borrowing facility size of $500.0 million, subject to a borrowing base with advances against certain U.S. and international accounts receivable, inventory and other assets as specified in the agreement. As of December 31, 2024, we had no borrowings outstanding under our Revolving Credit Facility, which had remaining availability of $211.4 million.
Previous wording
Our Revolving Credit Facility provides up to $50.0 million for the issuance of letters of credit, $13.3 million of which was used at December 31, 2023. These letters of credit are issued by the bank in favor of third parties and are mainly related to required insurance programs.
Current wording
Our Revolving Credit Facility provides up to $50.0 million for the issuance of letters of credit, $12.9 million of which was used at December 31, 2024. These letters of credit are issued by the bank in favor of third parties and are mainly related to required insurance programs.
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. The following table summarizes our obligations as of December 31, 2023 that are expected to impact liquidity and cash flow in future periods. See Liquidity and Capital Resources for additional discussion of our ability to generate and access cash to meet requirements as well as plans for use of cash in both the short-term and long-term.
Current wording
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans, purchase obligations and environmental remediation obligations. The following table summarizes our obligations as of December 31, 2024 that are expected to impact liquidity and cash flow in future periods. See Liquidity and Capital Resources for additional discussion of our ability to generate and access cash to meet requirements as well as plans for use of cash in both the short-term and long-term.
Previous wording
(2)Represents estimated contractual interest payments for all outstanding debt.
Current wording
(1)Represents estimated contractual interest payments for all outstanding debt. Excludes cash receipts from cross-currency swaps as described in Note 15, Derivatives and Hedging.
Previous wording
(3)This represents estimates related to the funding obligations of our pension and other post retirement plans. These contributions are based on actuarial estimates of future assumed payments based upon retirement and payment patterns for a 10-year period. The estimates in the table may differ materially from actual future payments due to uncertainties regarding the assumptions involved in estimating future required contributions to our pension and non-pension post retirement benefit plans, including (i) interest rate levels (ii) the amount and timing of asset returns and (iii) what, if any, changes may occur in pension funding legislation.
Current wording
(2)This represents estimates related to the funding obligations of our pension and other post retirement plans. These contributions are based on actuarial estimates of future assumed payments based upon retirement and payment patterns for a 10-year period. The estimates in the table may differ materially from actual future payments due to uncertainties regarding the assumptions involved in estimating future required contributions to our pension and non-pension post retirement benefit plans, including (i) interest rate levels (ii) the amount and timing of asset returns and (iii) what, if any, changes may occur in pension funding legislation.
Previous wording
(4)Purchase obligations are primarily comprised of service agreements related to telecommunication, information technology, utilities and other manufacturing plant services and certain capital commitments.
Current wording
(3)Purchase obligations are primarily comprised of service agreements related to telecommunication, information technology, utilities and other manufacturing plant services and certain capital commitments.
Previous wording
Environmental liabilities represents our best estimate of the remaining probable costs based upon information and technology currently available. Depending upon the results of future testing, the ultimate remediation alternatives undertaken, changes in regulations, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued. However, such additional costs, if any, cannot currently be estimated. Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained. As we progress through remedial design and remedial action related to the Goodrich Corporation Calvert City site, additional information will become available that may require an adjustment to our existing accrual.
Current wording
Environmental liabilities represents our best estimate of the remaining probable costs based upon information and technology currently available. Depending upon the results of future testing, the ultimate remediation alternatives undertaken, changes in regulations, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued. However, such additional costs, if any, cannot currently be estimated. Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained. As we progress through remedial design and remedial action related to the Goodrich Corporation Calvert City site, additional information will become available that may require an adjustment to our existing accrual. Adjustments have been material to our financial statements in the past and it is reasonably possible that they could be in the future.
Previous wording
The measurement of liabilities related to pension plans and other post-retirement benefits plans is based on assumptions related to future events including interest rates, return on plan assets, and mortality assumptions. We account for our defined benefit pension plans and other post-retirement plans in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Update (ASC) Topic 715, Compensation — Retirement Benefits. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur.
Current wording
The measurement of liabilities related to pension plans and other post-retirement benefits plans is based on assumptions related to future events including interest rates, return on plan assets, and mortality assumptions. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur.
Previous wording
We account for income taxes using the asset and liability method under FASB ASC Topic 740. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The utilization of certain deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors, such as changes in tax laws.
Current wording
We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The utilization of certain deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors, such as changes in tax laws.
Previous wording
We recognize net tax benefits under the recognition and measurement criteria of FASB ASC Topic 740, Income Taxes, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in law, facts and circumstances. We record interest and penalties related to uncertain tax positions as a component of income tax expense. The ultimate resolution of unrecognized income tax benefits is often dependent upon uncontrollable factors such as the timing of finalizing resolutions of audit disputes through reaching settlement agreements, or changes in law.
Current wording
We recognize net tax benefits under the recognition and measurement criteria, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in law, facts and circumstances. We record interest and penalties related to uncertain tax positions as a component of income tax expense. The ultimate resolution of unrecognized income tax benefits is often dependent upon uncontrollable factors such as the timing of finalizing resolutions of audit disputes through reaching settlement agreements, or changes in law.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Operationally, we will continue our enterprise-wide Lean Six Sigma program directed at improving margin, profitability and cash flow by applying proven management techniques and strategies to key areas of the business, such as pricing, supply chain and operations management, productivity and quality.