UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June~~September 30, 2022


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number 1-16091

________________________________________________

AVIENT CORPORATION

(Exact name of registrant as specified in its charter)


Ohio									34-1730488
(State or other jurisdiction									(I.R.S. Employer Identification No.)
of incorporation or organization)

Avient Center
33587 Walker Road									44012
Avon Lake, Ohio
(Address of principal executive offices)									(Zip Code)

Registrant’s telephone number, including area code: (440) 930-1000

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $.01 per share	AVNT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of the registrant’s outstanding common shares, par value $.01 per share, as of ~~June~~September 30, 2022 was ~~90,936,943.~~90,943,531.

AVIENT CORPORATION

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Avient Corporation

Condensed Consolidated Statements of Income (Unaudited)

(In millions, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021			2022		2021		2022		2021
Sales	Sales	$	1,302.4	$	1,235.2	$	2,596.2	$	2,397.5	Sales	$	823.3	$	818.0	$	2,606.5	$	2,508.5
Cost of sales	Cost of sales	998.6		946.5		1,998.7		1,806.4		Cost of sales	627.9		602.4		1,895.8		1,781.2
Gross margin	Gross margin	303.8		288.7		597.5		591.1		Gross margin	195.4		215.6		710.7		727.3
Selling and administrative expense	Selling and administrative expense	174.3		180.6		339.4		362.6		Selling and administrative expense	154.8		162.8		467.8		497.7

Operating income	Operating income	129.5		108.1		258.1		228.5		Operating income	40.6		52.8		242.9		229.6
Interest expense, net	Interest expense, net	(16.2)		(19.5)		(33.1)		(38.8)		Interest expense, net	(37.3)		(19.0)		(70.4)		(57.8)

Other income, net		1.4		1.2		0.8		2.7
Income before income taxes		114.7		89.8		225.8		192.4
Income tax expense		(30.0)		(20.4)		(56.6)		(43.3)
Net income		84.7		69.4		169.2		149.1
Other (expense) income, net										Other (expense) income, net	(32.3)		1.6		(31.3)		4.3
(Loss) income from continuing operations before income taxes										(Loss) income from continuing operations before income taxes	(29.0)		35.4		141.2		176.1
Income tax benefit (expense)										Income tax benefit (expense)	1.2		(2.0)		(41.5)		(32.1)
Net (loss) income from continuing operations										Net (loss) income from continuing operations	(27.8)		33.4		99.7		144.0
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	17.1		19.2		58.8		57.7
Net (loss) income										Net (loss) income	$	(10.7)	$	52.6	$	158.5	$	201.7
Net loss (income) attributable to noncontrolling interests										Net loss (income) attributable to noncontrolling interests	0.4		0.3		0.1		(0.7)
Net (loss) income attributable to Avient common shareholders										Net (loss) income attributable to Avient common shareholders	$	(10.3)	$	52.9	$	158.6	$	201.0

(Loss) earnings per share attributable to Avient common shareholders - Basic										(Loss) earnings per share attributable to Avient common shareholders - Basic
Continuing operations										Continuing operations	$	(0.30)	$	0.37	$	1.09	$	1.57
Discontinued operations										Discontinued operations	0.19		0.21		0.65		0.63
Total										Total	$	(0.11)	$	0.58	$	1.74	$	2.20

Net income attributable to noncontrolling interests		—		(0.6)		(0.3)		(1.0)
Net income attributable to Avient common shareholders		$	84.7	$	68.8	$	168.9	$	148.1

Earnings per share attributable to Avient common shareholders - Basic		$	0.93	$	0.75	$	1.85	$	1.62

Earnings per share attributable to Avient common shareholders - Diluted		$	0.92	$	0.74	$	1.83	$	1.60

(Loss) earnings per share attributable to Avient common shareholders - Diluted										(Loss) earnings per share attributable to Avient common shareholders - Diluted
Continuing operations										Continuing operations	$	(0.30)	$	0.37	$	1.08	$	1.56
Discontinued operations										Discontinued operations	0.19		0.20		0.64		0.62
Total										Total	$	(0.11)	$	0.57	$	1.72	$	2.18

Weighted-average shares used to compute earnings per common share:	Weighted-average shares used to compute earnings per common share:									Weighted-average shares used to compute earnings per common share:
Basic	Basic	91.4		91.3		91.4		91.3		Basic	90.9		91.4		91.3		91.3
Dilutive impact of share-based compensation	Dilutive impact of share-based compensation	0.7		1.1		0.8		1.0		Dilutive impact of share-based compensation	—		0.8		0.7		0.8
Diluted	Diluted	92.1		92.4		92.2		92.3		Diluted	90.9		92.2		92.0		92.1

Anti-dilutive shares not included in diluted common shares outstanding	Anti-dilutive shares not included in diluted common shares outstanding	0.2		—		0.3		—		Anti-dilutive shares not included in diluted common shares outstanding	1.0		—		0.3		—

Cash dividends declared per share of common stock	Cash dividends declared per share of common stock	$	0.2375	$	0.2125	$	0.4750	$	0.4250	Cash dividends declared per share of common stock	$	0.2375	$	0.2125	$	0.7125	$	0.6375

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

1 AVIENT CORPORATION

Avient Corporation

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions)
Three Months Ended
June 30, Six Months Ended
June 30,
2022 2021 2022 2021
Net income $ 84.7 $ 69.4 $ 169.2 $ 149.1
Other comprehensive (loss) income, net of tax:
Translation adjustments and related hedging instruments (50.2) 9.5 (59.3) (41.5)
Cash flow hedges 0.9 0.7 2.1 1.5
Total other comprehensive (loss) income (49.3) 10.2 (57.2) (40.0)
Total comprehensive income 35.4 79.6 112.0 109.1
Comprehensive income attributable to noncontrolling interests — (0.6) (0.3) (1.0)
Comprehensive income attributable to Avient common shareholders $ 35.4 $ 79.0 $ 111.7 $ 108.1


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(10.7)	$	52.6	$	158.5	$	201.7
Other comprehensive (loss) income, net of tax:
Translation adjustments and related hedging instruments	(61.1)		(29.4)		(120.4)		(70.9)
Cash flow hedges	0.2		0.7		2.3		2.2

Total other comprehensive loss	(60.9)		(28.7)		(118.1)		(68.7)
Total comprehensive (loss) income	(71.6)		23.9		40.4		133.0
Comprehensive loss (income) attributable to noncontrolling interests	0.4		0.3		0.1		(0.7)
Comprehensive (loss) income attributable to Avient common shareholders	$	(71.2)	$	24.2	$	40.5	$	132.3

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 AVIENT CORPORATION

Avient Corporation

Condensed Consolidated Balance Sheets

(In millions)


		(Unaudited) June 30, 2022		December 31, 2021			(Unaudited) September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	645.1	$	601.2	Cash and cash equivalents	$	544.4	$	601.2
Accounts receivable, net	Accounts receivable, net	752.6		642.3		Accounts receivable, net	504.6		439.9
Inventories, net	Inventories, net	494.0		461.1		Inventories, net	441.5		305.8

Current assets held for sale						Current assets held for sale	367.8		360.2
Other current assets	Other current assets	128.4		122.4		Other current assets	130.0		119.9
Total current assets	Total current assets	2,020.1		1,827.0		Total current assets	1,988.3		1,827.0
Property, net	Property, net	638.9		676.1		Property, net	965.4		672.3
Goodwill	Goodwill	1,256.8		1,286.4		Goodwill	1,491.0		1,284.8
Intangible assets, net	Intangible assets, net	867.2		925.2		Intangible assets, net	1,525.7		925.2
Operating lease assets, net	Operating lease assets, net	62.7		74.1		Operating lease assets, net	56.0		58.2

Non-current assets held for sale						Non-current assets held for sale	—		22.0
Other non-current assets	Other non-current assets	197.9		208.4		Other non-current assets	280.7		207.7
Total assets	Total assets	$	5,043.6	$	4,997.2	Total assets	$	6,307.1	$	4,997.2

LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Short-term and current portion of long-term debt	Short-term and current portion of long-term debt	$	607.7	$	8.6	Short-term and current portion of long-term debt	$	613.9	$	8.6
Accounts payable	Accounts payable	634.0		553.9		Accounts payable	448.7		429.5
Current operating lease obligations	Current operating lease obligations	21.4		24.2		Current operating lease obligations	18.1		21.1

Current liabilities held for sale						Current liabilities held for sale	170.3		141.3
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	307.5		353.9		Accrued expenses and other current liabilities	304.6		340.2
Total current liabilities	Total current liabilities	1,570.6		940.6		Total current liabilities	1,555.6		940.7
Non-current liabilities:	Non-current liabilities:					Non-current liabilities:
Long-term debt	Long-term debt	1,249.1		1,850.3		Long-term debt	2,502.9		1,850.3
Pension and other post-retirement benefits	Pension and other post-retirement benefits	95.0		100.0		Pension and other post-retirement benefits	91.6		99.9
Deferred income taxes	Deferred income taxes	106.6		100.6		Deferred income taxes	210.4		100.6
Non-current operating lease obligations	Non-current operating lease obligations	41.8		50.1		Non-current operating lease obligations	35.7		37.3

Non-current liabilities held for sale						Non-current liabilities held for sale	—		13.1
Other non-current liabilities	Other non-current liabilities	154.7		165.1		Other non-current liabilities	174.8		164.8
Total non-current liabilities	Total non-current liabilities	1,647.2		2,266.1		Total non-current liabilities	3,015.4		2,266.0

SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Avient shareholders’ equity	Avient shareholders’ equity	1,809.7		1,774.7		Avient shareholders’ equity	1,720.4		1,774.7
Noncontrolling interest	Noncontrolling interest	16.1		15.8		Noncontrolling interest	15.7		15.8
Total equity	Total equity	1,825.8		1,790.5		Total equity	1,736.1		1,790.5
Total liabilities and equity	Total liabilities and equity	$	5,043.6	$	4,997.2	Total liabilities and equity	$	6,307.1	$	4,997.2

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

3 AVIENT CORPORATION

Avient Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In millions)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2021			2022		2021
Operating Activities	Operating Activities					Operating Activities
Net income	Net income	$	169.2	$	149.1	Net income	$	158.5	$	201.7
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization	Depreciation and amortization	71.1		69.5		Depreciation and amortization	110.3		105.8
Accelerated depreciation and amortization		3.2		1.4
Accelerated depreciation						Accelerated depreciation	4.0		1.9

Share-based compensation expense	Share-based compensation expense	6.3		5.6		Share-based compensation expense	9.5		8.4

Changes in assets and liabilities, net of the effect of acquisitions:	Changes in assets and liabilities, net of the effect of acquisitions:					Changes in assets and liabilities, net of the effect of acquisitions:
Increase in accounts receivable	Increase in accounts receivable	(133.2)		(196.1)		Increase in accounts receivable	(66.5)		(199.7)
Increase in inventories	Increase in inventories	(45.9)		(88.1)		Increase in inventories	(12.5)		(156.2)
Increase in accounts payable	Increase in accounts payable	98.5		108.4		Increase in accounts payable	43.5		95.3
Decrease in pension and other post-retirement benefits	Decrease in pension and other post-retirement benefits	(9.9)		(9.2)		Decrease in pension and other post-retirement benefits	(15.8)		(14.2)

(Decrease) increase in accrued expenses and other assets and liabilities, net	(Decrease) increase in accrued expenses and other assets and liabilities, net	(52.6)		27.5		(Decrease) increase in accrued expenses and other assets and liabilities, net	(7.1)		67.0

Net cash provided by operating activities	Net cash provided by operating activities	106.7		68.1		Net cash provided by operating activities	223.9		110.0
Investing activities	Investing activities					Investing activities
Capital expenditures	Capital expenditures	(34.0)		(42.1)		Capital expenditures	(55.1)		(62.7)

Settlement of cross-currency swaps		75.1		—
Business acquisitions, net of cash acquired						Business acquisitions, net of cash acquired	(1,426.1)		(47.6)
Settlement of foreign exchange derivatives						Settlement of foreign exchange derivatives	93.3		—
Net cash proceeds used by other assets	Net cash proceeds used by other assets	—		(2.0)		Net cash proceeds used by other assets	—		(2.0)
Net cash provided (used) by investing activities		41.1		(44.1)
Net cash used by investing activities						Net cash used by investing activities	(1,387.9)		(112.3)
Financing activities	Financing activities					Financing activities

Debt proceeds						Debt proceeds	1,300.0		—

Purchase of common shares for treasury	Purchase of common shares for treasury	(36.4)		(4.2)		Purchase of common shares for treasury	(36.4)		(4.2)
Cash dividends paid	Cash dividends paid	(43.5)		(38.8)		Cash dividends paid	(65.2)		(58.2)

Repayment of long-term debt	Repayment of long-term debt	(4.4)		(4.4)		Repayment of long-term debt	(6.8)		(16.5)
Payments of withholding tax on share awards	Payments of withholding tax on share awards	(4.1)		(4.2)		Payments of withholding tax on share awards	(4.2)		(9.1)
Debt financing costs						Debt financing costs	(49.3)		—

Net cash used by financing activities		(88.4)		(51.6)
Other financing activities						Other financing activities	—		(3.5)
Net cash provided (used) by financing activities						Net cash provided (used) by financing activities	1,138.1		(91.5)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(15.5)		(5.7)		Effect of exchange rate changes on cash	(30.9)		(10.5)
Increase (decrease) in cash and cash equivalents		43.9		(33.3)
Decrease in cash and cash equivalents						Decrease in cash and cash equivalents	(56.8)		(104.3)
Cash and cash equivalents at beginning of year	Cash and cash equivalents at beginning of year	601.2		649.5		Cash and cash equivalents at beginning of year	601.2		649.5
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	645.1	$	616.2	Cash and cash equivalents at end of period	$	544.4	$	545.2

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

4 AVIENT CORPORATION

Avient Corporation

Consolidated Statements of Shareholders' Equity (Unaudited)

(In millions)


		Common Shares		Shareholders’ Equity																	Common Shares		Shareholders’ Equity
		Common Shares	Common Shares Held in Treasury	Common Shares		Additional Paid-in Capital		Retained Earnings		Common Shares Held in Treasury		Accumulated Other Comprehensive (Loss) Income		Total Avient shareholders' equity		Non-controlling Interests		Total equity			Common Shares	Common Shares Held in Treasury	Common Shares		Additional Paid-in Capital		Retained Earnings		Common Shares Held in Treasury		Accumulated Other Comprehensive (Loss) Income		Total Avient shareholders' equity		Non-controlling Interests		Total equity
Balance at January 1, 2022	Balance at January 1, 2022	122.2	(30.6)	$	1.2	$	1,511.8	$	1,208.0	$	(900.7)	$	(45.6)	$	1,774.7	$	15.8	$	1,790.5	Balance at January 1, 2022	122.2	(30.6)	$	1.2	$	1,511.8	$	1,208.0	$	(900.7)	$	(45.6)	$	1,774.7	$	15.8	$	1,790.5
Net income	Net income	—	—	—		—		84.2		—		—		84.2		0.3		84.5		Net income	—	—	—		—		84.2		—		—		84.2		0.3		84.5
Other comprehensive loss	Other comprehensive loss	—	—	—		—		—		—		(7.9)		(7.9)		—		(7.9)		Other comprehensive loss	—	—	—		—		—		—		(7.9)		(7.9)		—		(7.9)

Cash dividends declared (1)		—	—	—		—		(21.7)		—		—		(21.7)		—		(21.7)
Cash dividends declared																				Cash dividends declared	—	—	—		—		(21.7)		—		—		(21.7)		—		(21.7)
Repurchase of common shares	Repurchase of common shares	—	(0.3)	—		—		—		(15.8)		—		(15.8)		—		(15.8)		Repurchase of common shares	—	(0.3)	—		—		—		(15.8)		—		(15.8)		—		(15.8)

Share-based compensation and exercise of awards	Share-based compensation and exercise of awards	—	0.1	—		(2.2)		—		1.9		—		(0.3)		—		(0.3)		Share-based compensation and exercise of awards	—	0.1	—		(2.2)		—		1.9		—		(0.3)		—		(0.3)

Balance at March 31, 2022	Balance at March 31, 2022	122.2	(30.8)	$	1.2	$	1,509.6	$	1,270.5	$	(914.6)	$	(53.5)	$	1,813.2	$	16.1	$	1,829.3	Balance at March 31, 2022	122.2	(30.8)	$	1.2	$	1,509.6	$	1,270.5	$	(914.6)	$	(53.5)	$	1,813.2	$	16.1	$	1,829.3
Net income	Net income	—	—	—		—		84.7		—		—		84.7		0		84.7		Net income	—	—	—		—		84.7		—		—		84.7		—		84.7
Other comprehensive income		—	—	—		—		—		—		(49.3)		(49.3)		—		(49.3)
Other comprehensive loss																				Other comprehensive loss	—	—	—		—		—		—		(49.3)		(49.3)		—		(49.3)

Cash dividends declared (1)		—	—	—		—		(21.7)		—		—		(21.7)		—		(21.7)
Cash dividends declared																				Cash dividends declared	—	—	—		—		(21.7)		—		—		(21.7)		—		(21.7)
Repurchase of common shares	Repurchase of common shares	—	(0.5)	—		—		—		(20.6)		—		(20.6)		—		(20.6)		Repurchase of common shares	—	(0.5)	—		—		—		(20.6)		—		(20.6)		—		(20.6)

Share-based compensation and exercise of awards	Share-based compensation and exercise of awards	—	—	—		3.4		—		—		—		3.4		—		3.4		Share-based compensation and exercise of awards	—	—	—		3.4		—		—		—		3.4		—		3.4

Balance at June 30, 2022	Balance at June 30, 2022	122.2	(31.3)	$	1.2	$	1,513.0	$	1,333.5	$	(935.2)	$	(102.8)	$	1,809.7	$	16.1	$	1,825.8	Balance at June 30, 2022	122.2	(31.3)	$	1.2	$	1,513.0	$	1,333.5	$	(935.2)	$	(102.8)	$	1,809.7	$	16.1	$	1,825.8
Net loss																				Net loss	—	—	—		—		(10.3)		—		—		(10.3)		(0.4)		(10.7)
Other comprehensive loss																				Other comprehensive loss	—	—	—		—		—		—		(60.9)		(60.9)		—		(60.9)

Cash dividends declared																				Cash dividends declared	—	—	—		—		(21.6)		—		—		(21.6)		—		(21.6)

Share-based compensation and exercise of awards																				Share-based compensation and exercise of awards	—	—	—		3.4		—		0.1		—		3.5		—		3.5

Balance at September 30, 2022																				Balance at September 30, 2022	122.2	(31.3)	1.2		$	1,516.4	$	1,301.6	$	(935.1)	$	(163.7)	$	1,720.4	$	15.7	$	1,736.1


~~(1)~~ ~~Dividends declared per share were $0.2375 and $0.4750 for the three and six months ended June 30, 2022, respectively.~~

Common Shares Shareholders’ Equity
Common
Shares Common
Shares Held
in Treasury Common
Shares Additional
Paid-in
Capital Retained Earnings Common
Shares Held
in Treasury Accumulated
Other
Comprehensive
(Loss) Income Total Avient shareholders' equity Non-controlling Interests Total equity
Balance at January 1, 2021 122.2 (30.8) $ 1.2 $ 1,513.3 $ 1,057.4 $ (901.2) $ 26.4 $ 1,697.1 $ 14.6 $ 1,711.7
Net income — — — — 79.3 — — 79.3 0.4 79.7
Other comprehensive loss — — — — — — (50.2) (50.2) — (50.2)
Cash dividends declared (1)
— — — — (19.5) — — (19.5) — (19.5)
Repurchase of common shares — (0.1) — — — (4.2) — (4.2) — (4.2)
Share-based compensation and exercise of awards — 0.1 — 2.9 — 1.6 — 4.5 — 4.5
Balance at March 31, 2021 122.2 (30.8) $ 1.2 $ 1,516.2 $ 1,117.2 $ (903.8) $ (23.8) $ 1,707.0 $ 15.0 $ 1,722.0
Net income — — — — 68.8 — — 68.8 0.6 69.4
Other comprehensive income — — — — — — 10.2 10.2 — 10.2
Noncontrolling interest activity — — — — — — — — 2.6 2.6
Cash dividends declared (1)
— — — — (19.4) — — (19.4) — (19.4)
Share-based compensation and exercise of awards — — — 1.0 — 0.6 — 1.6 — 1.6
Balance at June 30, 2021 122.2 (30.8) $ 1.2 $ 1,517.2 $ 1,166.6 $ (903.2) $ (13.6) $ 1,768.2 $ 18.2 $ 1,786.4


~~(1)~~ ~~Dividends declared per share were $0.2125 and $0.4250 for the three and six months ended June 30, 2021, respectively.~~

5 AVIENT CORPORATION


	Common Shares		Shareholders’ Equity
	Common Shares	Common Shares Held in Treasury	Common Shares		Additional Paid-in Capital		Retained Earnings		Common Shares Held in Treasury		Accumulated Other Comprehensive (Loss) Income		Total Avient shareholders' equity		Non-controlling Interests		Total equity
Balance at January 1, 2021	122.2	(30.8)	$	1.2	$	1,513.3	$	1,057.4	$	(901.2)	$	26.4	$	1,697.1	$	14.6	$	1,711.7
Net income	—	—	—		—		79.3		—		—		79.3		0.4		79.7
Other comprehensive loss	—	—	—		—		—		—		(50.2)		(50.2)		—		(50.2)

Cash dividends declared	—	—	—		—		(19.5)		—		—		(19.5)		—		(19.5)
Repurchase of common shares	—	(0.1)	—		—		—		(4.2)		—		(4.2)		—		(4.2)

Share-based compensation and exercise of awards	—	0.1	—		2.9		—		1.6		—		4.5		—		4.5

Balance at March 31, 2021	122.2	(30.8)	$	1.2	$	1,516.2	$	1,117.2	$	(903.8)	$	(23.8)	$	1,707.0	$	15.0	$	1,722.0
Net income	—	—	—		—		68.8		—		—		68.8		0.6		69.4
Other comprehensive income	—	—	—		—		—		—		10.2		10.2		—		10.2
Noncontrolling interest activity	—	—	—		—		—		—		—		—		2.6		2.6
Cash dividends declared	—	—	—		—		(19.4)		—		—		(19.4)		—		(19.4)

Share-based compensation and exercise of awards	—	—	—		1.0		—		0.6		—		1.6		—		1.6
Other	—	—	$	—	—		—		—		—		—		—		—
Balance at June 30, 2021	122.2	(30.8)	$	1.2	$	1,517.2	$	1,166.6	$	(903.2)	$	(13.6)	$	1,768.2	$	18.2	$	1,786.4
Net income	—	—	—		—		52.9		—		—		52.9		(0.3)		52.6
Other comprehensive loss	—	—	—		—		—		—		(28.7)		(28.7)		—		(28.7)
Noncontrolling interest activity	—	—	—		—		—		—		—		—		(1.3)		(1.3)
Cash dividends declared	—	—	—		—		(19.6)		—		—		(19.6)		—		(19.6)

Share-based compensation and exercise of awards	—	0.1	—		(3.2)		—		1.6		—		(1.6)		—		(1.6)
Other	—	—	—		(2.4)		—		—		—		(2.4)		—		(2.4)
Balance at September 30, 2021	122.2	(30.7)	$	1.2	$	1,511.6	$	1,199.9	$	(901.6)	$	(42.3)	$	1,768.8	$	16.6	$	1,785.4

See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

56 AVIENT CORPORATION

Avient Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal, recurring and necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2021 of Avient ~~Corporation, formerly known as PolyOne~~ Corporation. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation and its consolidated subsidiaries.

Operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2022 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2022. Historical information has been retrospectively adjusted to reflect the classification of discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations.

Accounting Standards Not Yet Adopted

Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (ASU 2020-04), provides optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference rates that are expected to be discontinued, such as LIBOR. The amendments in ASU 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rates expected to be discontinued. The amendments in ASU 2020-04 are effective through December 31, 2022. The Company is currently evaluating the impact of adopting this standard and does not expect any material impact to our consolidated financial statements and disclosures.

Note 2 — BUSINESS COMBINATIONS

On ~~April 19,~~September 1, 2022, ~~we entered into a signing protocol (the Signing Protocol) with Koninklijke DSM N.V., a public limited liability company incorporated under~~ the ~~laws~~Company completed the acquisition of the Netherlands (DSM). Pursuant to the terms of the Signing Protocol, Avient and DSM agreed that, after completion of the consultation process with the relevant Dutch works council, they would will enter into a Sale and Purchase Agreement (the Purchase Agreement) pursuant to which Avient will, among other things, acquire from DSM (a) all of the equity of DSM Protective Materials ~~International B.V.,~~business, including the Dyneema® brand, the World's Strongest Fiber™. The Dyneema® brand ultra-light specialty fiber is stronger than steel and 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 Avient Protective Materials and APM, and the acquisition is referred to as the APM Acquisition. The APM Acquisition enhances Avient's material offerings of composites and engineered fibers.

Total consideration paid by the Company to complete the APM Acquisition was $1.4 billion, net of cash acquired. Avient (i) incurred $575.0 million of borrowings under a ~~private limited liability company organized~~new Senior Secured Term Loan due 2029 and (ii) issued $725.0 million aggregate principal of 7.125% Senior Notes due 2030 to finance a portion of the APM Acquisition. For additional details relating to the financing, refer to Note 8, Financing Arrangements.

The APM Acquisition is being accounted for under the ~~laws~~acquisition method of accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 805. As of September 30, 2022, the purchase accounting for the APM Acquisition is preliminary and purchase price allocation adjustments will be made throughout the end of the ~~Netherlands, DSM Protective~~Company's measurement period, which is not to exceed one year from the acquisition date. During the measurement period, we will continue to obtain information to assist in finalizing the fair value of assets acquired and liabilities assumed, which may differ materially from the preliminary estimates.

7 AVIENT CORPORATION

The preliminary purchase price allocation is as follows:


(in millions)	September 1, 2022
Cash and cash equivalents	$	50.7
Accounts receivable	52.2

Inventories	136.2
Other current assets	2.0
Property	361.9
Intangible assets
Indefinite-lived trade names	254.9
Customer relationships	198.7
Patents, technology, and other	275.1
Goodwill	277.1



Other non-current assets	12.3
Accounts payable	32.2

Current operating lease obligations	1.2
Accrued expenses and other current liabilities	11.7
Deferred tax liability	86.1
Non-current operating lease obligations	5.0

Other non-current liabilities	8.1
Total purchase price consideration	$	1,476.8

Definite-lived intangible assets that have been acquired have a preliminary useful life range of 16 to 20 years. Goodwill of $277.1 million resulting from the acquisition was recorded to the Specialty Engineered Materials ~~B.V.,~~segment. The goodwill recognized is primarily attributable to intangible assets that do not qualify for separate recognition and the deferred tax impact of applying purchase accounting. We expect a ~~private limited liability company organized~~portion of goodwill to be deductible for tax purposes.

The amount of sales and loss from continuing operations before income taxes of APM since the acquisition date included in the Condensed Consolidated Statements of Income as of September 30, 2022 were $32.3 million and $7.0 million, respectively. The loss from continuing operations before income taxes includes $10.6 million of expense related to inventory step-up from the preliminary purchase price allocation, which is recorded in Cost of sales. Had the APM Acquisition occurred on January 1, 2021, sales and income from continuing operations before income taxes on a pro forma basis would have been as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Sales	$884.0	$912.1	$2,863.1	$2,810.1
(Loss) income from continuing operations before income taxes	(9.8)	21.0	146.8	72.4

The unaudited pro forma financial information has been calculated after applying our accounting policies and adjusting the historical results with pro forma adjustments that assume the APM Acquisition occurred on January 1, 2021. These unaudited pro forma results do not represent financial results realized, nor are they intended to be a projection of future results.

8 AVIENT CORPORATION

Pro forma income from continuing operations before income taxes during the nine months ended September 30, 2021 includes expense related to inventory step-up from the preliminary purchase price allocation. The pro forma income from continuing operations before income taxes gives further effect to intangible amortization from the preliminary purchase price allocation and increased interest expense resulting from borrowings under the ~~laws~~Senior Secured Term Loan due 2029 and the issuance of the ~~Netherlands,~~7.125% Senior Notes due 2030 to fund the APM Acquisition.

Costs incurred in connection with the APM Acquisition were $8.1 million and DSM Protective Materials LLC, a Delaware limited liability company, and (b) certain other assets related to DSM's protective materials business (including the Dyneema© Brand) (such equity and assets together, the Dyneema Business) (such acquisition of the Dyneema Business, the Dyneema Acquisition). Avient and DSM entered into the Purchase Agreement on June 23, 2022.

Pursuant to the terms of the Purchase Agreement, we have agreed to acquire the Dyneema Business for an aggregate purchase price of €1.38 billion, subject to certain customary adjustments for a European “locked box” transaction (the Purchase Price). Certain Purchase Price payments are Euro-denominated and are subject to change based on fluctuations$12.7 million in the ~~euro-U.S. dollar exchange rate. The closing~~three and nine months ended September 30, 2022, respectively. These fees were charged to Selling and Administrative expense on the Condensed Consolidated Statements of ~~the Dyneema Acquisition will be subject to the satisfaction or waiver of customary and other conditions. We have received all required regulatory approvals.~~

~~In conjunction with our intent to acquire the Dyneema Business, we are exploring a potential sale of our Distribution business.~~Income.

On July 1, 2021, the Company completed its acquisition of Magna Colours Ltd. (Magna Colours), a market leader in sustainable, water-based inks technology for the textile screen printing industry, for the purchase price of $47.6 million, net of cash acquired. The results of the Magna Colours business are reported in the Color, Additives and Inks segment. The purchase price allocation is complete and resulted in intangible assets of $27.5 million and goodwill of $22.0 million, partially offset by net liabilities assumed. Goodwill is not deductible for tax purposes. The intangible assets that have been acquired are being amortized over a period of 10 to 20 years.

Note 3 — DISCONTINUED OPERATIONS

On August 11, 2022, Avient entered into a definitive asset purchase agreement (the "Purchase Agreement") with an affiliate of H.I.G. Capital, (the "Purchaser"), to sell its Distribution business. Pursuant to the terms of the Purchase ~~accounting~~Agreement, the Purchaser has agreed to acquire the Company's Distribution business for $950.0 million in cash, subject to a customary working capital adjustment.

Avient has classified its Distribution business assets and liabilities as held-for-sale for all periods presented in the accompanying Condensed Consolidated Balance Sheets and has classified its operating results as discontinued operations in the accompanying Condensed Consolidated Statements of Income for all periods presented. Previously, the Distribution business was ~~finalized as~~a separate reportable segment.

The following table summarizes the major line items constituting pretax income of ~~June~~discontinued operations associated with the Distribution business segment for the three and nine months ended September 30, ~~2022.~~2022 and 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2022		2021		2022		2021
Sales	$	398.6	$	401.8	$	1,211.6	$	1,108.9
Cost of sales	355.4		362.0		1,085.9		989.6
Selling and administrative expense	18.2		13.9		44.9		41.6
Other (expense) income	(0.9)		(0.2)		(1.0)		(0.3)
Income before income taxes	24.1		25.7		79.8		77.4
Income tax expense	(7.0)		(6.5)		(21.0)		(19.7)
Income from discontinued operations, net of taxes	$	17.1	19.2		58.8		57.7

The effective tax rate for discontinued operations was 28.9% and 25.3% for the three months ended September 30, 2022 and 2021, respectively, and 26.3% and 25.5% for the nine months ended September 30, 2022 and 2021, respectively. The tax rate is above the US federal rate of 21% primarily due to state and local taxes along with the impacts of global intangible low-taxed income (GILTI) tax.

69 AVIENT CORPORATION

The following table summarizes the major classes of assets and liabilities of the Distribution business that were classified as held for sale in the consolidated balance sheets as of September 30, 2022 and December 31, 2021:


(In millions)	September 30, 2022		December 31, 2021
Assets held-for-sale:
Accounts receivable, net	$	211.9	$	202.4
Inventories, net	132.4		155.3
Property, net	3.5		3.9
Goodwill	1.6		1.6
Other assets	18.4		19.0
Total assets held-for-sale	$	367.8	$	382.2

Liabilities held-for-sale:
Accounts payable	$	145.3	$	124.4
Other liabilities	25.0		30.0
Total liabilities held-for-sale	$	170.3	$	154.4

	September 30, 2022		December 31, 2021
Assets held-for-sale:
Current	$	367.8	$	360.2
Non-current	$	—	$	22.0

Liabilities held-for-sale:
Current	$	170.3	$	141.3
Non-current	$	—	$	13.1

As of September 30, 2022, the Distribution business met the held for sale criteria, and the sale is expected to be completed in the fourth quarter of 2022. As a result, all assets and liabilities are reflected as current.

10 AVIENT CORPORATION

Note 34 — GOODWILL AND INTANGIBLE ASSETS

Goodwill as of ~~June~~September 30, 2022 and December 31, 2021 and changes in the carrying amount of goodwill by segment were as follows:


(In millions)	(In millions)	Specialty Engineered Materials		Color, Additives and Inks		Distribution		Total		(In millions)	Specialty Engineered Materials		Color, Additives and Inks		Total
Balance at December 31, 2021	Balance at December 31, 2021	$	236.3	$	1,048.5	$	1.6	$	1,286.4	Balance at December 31, 2021	$	236.3	$	1,048.5	$	1,284.8

Acquisition of businesses										Acquisition of businesses	277.1		—		277.1
Currency translation	Currency translation	(1.6)		(28.0)		—		(29.6)		Currency translation	(13.1)		(57.8)		(70.9)
Balance at June 30, 2022		$	234.7	$	1,020.5	$	1.6	$	1,256.8
Balance at September 30, 2022										Balance at September 30, 2022	$	500.3	$	990.7	$	1,491.0

Indefinite and finite-lived intangible assets consisted of the following:


		As of June 30, 2022									As of September 30, 2022
(In millions)	(In millions)	Acquisition Cost		Accumulated Amortization		Currency Translation		Net		(In millions)	Acquisition Cost		Accumulated Amortization		Currency Translation		Net
Customer relationships	Customer relationships	$	507.2	$	(148.3)	$	(6.5)	$	352.4	Customer relationships	$	705.9	$	(156.0)	$	(25.4)	$	524.5
Patents, technology and other	Patents, technology and other	566.7		(149.0)		(15.9)		401.8		Patents, technology and other	841.8		(158.2)		(42.1)		641.5
Indefinite-lived trade names	Indefinite-lived trade names	113.2		—		(0.2)		113.0		Indefinite-lived trade names	368.0		—		(8.3)		359.7
Total	Total	$	1,187.1	$	(297.3)	$	(22.6)	$	867.2	Total	$	1,915.7	$	(314.2)	$	(75.8)	$	1,525.7


	As of December 31, 2021
(In millions)	Acquisition Cost		Accumulated Amortization		Currency Translation		Net
Customer relationships	$	507.2	$	(135.4)	$	6.0	$	377.8
Patents, technology and other	566.7		(134.3)		1.8		434.2
Indefinite-lived trade names	113.2		—		—		113.2
Total	$	1,187.1	$	(269.7)	$	7.8	$	925.2

~~Note 4 — LEASING ARRANGEMENTS~~

We lease certain manufacturing facilities, warehouse space, machinery and equipment, vehicles and information technology equipment. The majority of our leases are operating leases. Finance leases are immaterial to our condensed consolidated financial statements. Operating lease assets and obligations are reflected within ~~Operating lease assets, net, Current operating lease obligations,~~ ~~and~~ ~~Non-current operating lease obligations,~~ ~~respectively, on the Condensed Consolidated Balance Sheets.~~

Lease expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Condensed Consolidated Statements of Income were as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
(In millions) 2022 2021 2022 2021
Cost of sales $ 4.8 $ 5.5 $ 9.2 $ 9.3
Selling and administrative expense 2.2 3.4 4.5 7.8
Total operating lease cost $ 7.0 $ 8.9 $ 13.7 $ 17.1

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of June 30, 2022 and 2021 was 4.8 years and 4.9 years, respectively.

~~7 AVIENT CORPORATION~~

The discount rate implicit within our leases is generally not determinable and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rates used to measure our operating lease liabilities as of June 30, 2022 and 2021 were 3.7%.

~~Maturity Analysis of Operating Lease Liabilities:~~

As of June 30, 2022
(In millions)
2022 $ 12.4
2023 19.9
2024 12.9
2025 8.1
2026 5.0
Thereafter 11.3
Total lease payments 69.4
Less amount of lease payment representing interest (6.2)
Total present value of lease payments $ 63.2

Note 5 — INVENTORIES, NET

Components of Inventories, net are as follows:


(In millions)	(In millions)	As of June 30, 2022		As of December 31, 2021		(In millions)	As of September 30, 2022		As of December 31, 2021
Finished products	Finished products	$	252.7	$	244.4	Finished products	$	197.8	$	90.0
Work in process	Work in process	26.1		21.2		Work in process	25.6		21.2
Raw materials and supplies	Raw materials and supplies	215.2		195.5		Raw materials and supplies	218.1		194.6
Inventories, net	Inventories, net	$	494.0	$	461.1	Inventories, net	$	441.5	$	305.8

Note 6 — PROPERTY, NET

Components of Property, net are as follows:


(In millions)	(In millions)	As of June 30, 2022		As of December 31, 2021		(In millions)	As of September 30, 2022		As of December 31, 2021
Land and land improvements	Land and land improvements	$	86.1	$	91.5	Land and land improvements	$	80.9	$	91.5
Buildings	Buildings	344.3		350.6		Buildings	382.2		348.1
Machinery and equipment	Machinery and equipment	968.5		972.3		Machinery and equipment	1,272.8		965.4
Property, gross	Property, gross	1,398.9		1,414.4		Property, gross	1,735.9		1,405.0
Less accumulated depreciation	Less accumulated depreciation	(760.0)		(738.3)		Less accumulated depreciation	(770.5)		(732.7)
Property, net	Property, net	$	638.9	$	676.1	Property, net	$	965.4	$	672.3

11 AVIENT CORPORATION

Note 7 — INCOME TAXES

During the three ~~and six~~ months ended ~~June~~September 30, 2022, the effective tax rate benefit from continuing operations of 4.1% was below the U.S. federal statutory rate of 21.0%. The tax rate benefit relates to a pretax loss as well as state income tax benefits, prior year favorable U.S. return-to-provision adjustments and the U.S. research and development tax credit. These favorable items were partially offset by foreign withholding tax liabilities accrued associated with the future repatriation of certain foreign earnings, global intangible low-taxed income (GILTI) tax, certain non-deductible expenses and an increase in valuation allowances.

During the nine months ended September 30, 2022, the Company’s effective tax rate from continuing operations of ~~26.1% and 25.0%, respectively,~~29.4% was above the U.S. federal statutory rate of 21.0% primarily due to ~~state taxes,~~ foreign withholding tax ~~liability~~liabilities accrued associated with the future repatriation of certain ~~current year~~ foreign earnings, GILTI tax, certain non-deductible expenses and ~~global intangible low-taxed income (GILTI) tax.~~an increase in valuation allowances. These unfavorable items were partially offset by prior year favorable U.S. return-to-provision adjustments and the U.S. research and development tax credit.

During the three and ~~six~~nine months ended ~~June~~September 30, 2021, the ~~Company’s~~Company's effective tax ~~rate~~rates from continuing operations of ~~22.6%~~5.7% and ~~22.5%~~18.2%, respectively, ~~was above~~were below the U.S. federal statutory rate of 21.0% primarily due to ~~state taxes, foreign withholding~~higher U.S. foreign-derived intangible income (FDII) tax liability accrued associated with the future repatriation of certain current year foreign earnings and GILTI tax. These unfavorable items were partially offset by changes in net foreign deferred tax assets from a foreign statutory tax rate change,benefits, favorable prior year ~~foreign~~U.S. return-to-provision adjustments and U.S. research and development tax credit. These favorable items were partially offset by foreign withholding tax liabilities accrued associated with the repatriation of certain foreign earnings and GILTI tax.

~~8 AVIENT CORPORATION~~

Note 8 — FINANCING ARRANGEMENTS

Debt consists of the following instruments:


As of June 30, 2022 (in millions)		Principal Amount		Unamortized discount and debt issuance cost		Net Debt		Weighted average interest rate
As of September 30, 2022 (in millions)										As of September 30, 2022 (in millions)	Principal Amount		Unamortized discount and debt issuance cost		Net Debt		Weighted average interest rate
Senior secured revolving credit facility due 2026	Senior secured revolving credit facility due 2026	$	—	$	—	$	—	—	%	Senior secured revolving credit facility due 2026	$	—	$	—	$	—	—	%
Senior secured term loan due 2026	Senior secured term loan due 2026	608.2		5.3		602.9		2.21	%	Senior secured term loan due 2026	606.6		4.9		601.7		2.95	%
Senior secured term loan due 2029										Senior secured term loan due 2029	575.0		28.2		546.8		5.51	%
5.25% senior notes due 2023	5.25% senior notes due 2023	600.0		0.8		599.2		5.25	%	5.25% senior notes due 2023	600.0		0.5		599.5		5.25	%
5.75% senior notes due 2025	5.75% senior notes due 2025	650.0		5.9		644.1		5.75	%	5.75% senior notes due 2025	650.0		5.4		644.6		5.75	%
7.125% senior notes due 2030										7.125% senior notes due 2030	725.0		10.6		714.4		7.125	%
Other Debt	Other Debt	10.6		—		10.6				Other Debt	9.8		—		9.8
Total Debt	Total Debt	1,868.8		12.0		1,856.8				Total Debt	3,166.4		49.6		3,116.8
Less short-term and current portion of long-term debt	Less short-term and current portion of long-term debt	608.5		0.8		607.7				Less short-term and current portion of long-term debt	614.4		0.5		613.9
Total long-term debt, net of current portion	Total long-term debt, net of current portion	$	1,260.3	$	11.2	$	1,249.1			Total long-term debt, net of current portion	$	2,552.0	$	49.1	$	2,502.9


As of December 31, 2021 (in millions)	Principal Amount		Unamortized discount and debt issuance cost		Net Debt		Weighted average interest rate
Senior secured revolving credit facility due 2026	$	—	$	—	$	—	—	%
Senior secured term loan due 2026	611.5		6.2		605.3		1.85	%
5.25% senior notes due 2023	600.0		1.4		598.6		5.25	%
5.75% senior notes due 2025	650.0		6.8		643.2		5.75	%
Other Debt	11.8		—		11.8
Total Debt	1,873.3		14.4		1,858.9
Less short-term and current portion of long-term debt	8.6		—		8.6
Total long-term debt, net of current portion	$	1,864.7	$	14.4	$	1,850.3

On August 10, 2022, the Company entered into an indenture with U.S. Bank Trust Company, National Association, as trustee, relating to the issuance by the Company of $725 million aggregate principal amount of 7.125% Senior Notes due 2030 (the 2030 Notes). The 2030 Notes were sold on August 10, 2022 in a private offering. The 2030 Notes bear interest at a rate of 7.125% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2023. The 2030 Notes will mature on August 1, 2030. The 2030 Notes are senior unsecured obligations of the Company.

12 AVIENT CORPORATION

On August 29, 2022, the Company entered into the Amendment Agreement No. 7 (the Term Loan Amendment) relating to the Credit Agreement, dated as of November 12, 2015, by and among Avient, Citibank, N.A., as administrative agent, and the lenders party thereto, with Citibank, N.A., as administrative agent, and the other agents and lenders named therein. Pursuant to the Term Loan Amendment, Avient, among other things, incurred a new tranche of Senior Secured Term Loan due 2029 (the 2029 Term Loan) in an aggregate principal amount equal to $575 million. The 2029 Term Loan was fully drawn on August 29, 2022. The interest rates per annum applicable to both the 2029 Term Loan and the existing term loan under the Credit Agreement will be either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 3.25% or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 2.25%. The other terms and conditions that apply to the 2029 Term Loan are substantially the same as the terms and conditions that applied to the existing term loan under the Credit Agreement immediately prior to the Term Loan Amendment.

The Company used the net proceeds from the issuance of the 2030 Notes and the borrowings under the 2029 Term Loan to finance a portion of the consideration for the APM Acquisition.

As of ~~June~~September 30, 2022, we had no borrowings outstanding under our ~~Revolving Credit Facility,~~senior secured revolving credit, which had remaining availability of ~~$487.1~~$485.1 million.

The agreements governing our senior secured revolving credit facility, our senior secured term ~~loan,~~loans, and the indentures and credit agreements governing other debt contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of ~~June~~September 30, 2022, we were in compliance with all covenants.

The estimated fair value of Avient’s debt instruments at ~~June~~September 30, 2022 and December 31, 2021 was ~~$1,826.7~~$3,032.1 million and $1,917.7 million, respectively. The fair value of Avient’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy.

In connection with the Dyneema Acquisition, on April 19, 2022, we entered into a Commitment Letter with Morgan Stanley Senior Funding, Inc. and J.P. Morgan (the Commitment Parties), pursuant to which the Commitment Parties committed to provide us with a $640.0 million senior secured term loan facility and a $900.0 million senior unsecured bridge loan (the Bridge Facility) for purposes of funding the Dyneema Acquisition. The commitment is subject to various conditions, including the execution of definitive documentation and other customary closing conditions. We currently intend to issue new senior long-term debt in lieu of borrowing under the Bridge Facility.

Note 9 — SEGMENT INFORMATION

Avient has 3two reportable segments: (1) Color, Additives and ~~Inks;~~Inks and (2) Specialty Engineered ~~Materials;~~Materials. Previously, Avient had three reportable segments; however, as a result of the agreement to divest our Distribution business, we have removed Distribution as a separate reportable segment and ~~(3) Distribution.~~its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. Refer to Note 3, Discontinued Operations for additional information. 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; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, and other

~~9 AVIENT CORPORATION~~

liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; 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 and eliminations.

13 AVIENT CORPORATION

Segment information for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 is as follows:


		Three Months Ended June 30, 2022						Three Months Ended June 30, 2021							Three Months Ended September 30, 2022				Three Months Ended September 30, 2021
(In millions)	(In millions)	Sales to External Customers		Total Sales		Operating Income		Sales to External Customers		Total Sales		Operating Income		(In millions)	Sales		Operating Income			Sales		Operating Income
Color, Additives and Inks	Color, Additives and Inks	$	646.8	$	649.1	$	93.6	$	622.3	$	624.4	$	86.3	Color, Additives and Inks	$	565.6	$	68.6		$	586.6	$	66.8
Specialty Engineered Materials	Specialty Engineered Materials	223.8		243.9		36.6		219.1		240.6		37.3		Specialty Engineered Materials	258.2		31.4			231.7		30.0
Distribution		431.8		443.2		27.1		392.1		404.4		23.7

Corporate and eliminations	Corporate and eliminations	—		(33.8)		(27.8)		1.7		(34.2)		(39.2)		Corporate and eliminations	(0.5)		(59.4)			(0.3)		(44.0)
Total	Total	$	1,302.4	$	1,302.4	$	129.5	$	1,235.2	$	1,235.2	$	108.1	Total	$	823.3	$	40.6		$	818.0	$	52.8


		Six Months Ended June 30, 2022						Six Months Ended June 30, 2021							Nine Months Ended September 30, 2022				Nine Months Ended September 30, 2021
(In millions)	(In millions)	Sales to External Customers		Total Sales		Operating Income		Sales to External Customers		Total Sales		Operating Income		(In millions)	Sales		Operating Income			Sales		Operating Income
Color, Additives and Inks	Color, Additives and Inks	$	1,294.8	$	1,298.6	$	188.1	$	1,230.2	$	1,233.7	$	175.1	Color, Additives and Inks	$	1,864.2	$	256.7		$	1,820.3	$	241.9
Specialty Engineered Materials	Specialty Engineered Materials	447.1		488.6		76.3		414.9		457.1		71.5		Specialty Engineered Materials	743.6		104.9			685.3		98.4
Distribution		854.3		876.1		51.3		747.0		767.1		47.7

Corporate and eliminations	Corporate and eliminations	—		(67.1)		(57.6)		5.4		(60.4)		(65.8)		Corporate and eliminations	(1.3)		(118.7)			2.9		(110.7)
Total	Total	$	2,596.2	$	2,596.2	$	258.1	$	2,397.5	$	2,397.5	$	228.5	Total	$	2,606.5	$	242.9		$	2,508.5	$	229.6


		Total Assets					Total Assets
(In millions)	(In millions)	As of June 30, 2022		As of December 31, 2021		(In millions)	As of September 30, 2022		As of December 31, 2021
Color, Additives and Inks	Color, Additives and Inks	$	2,933.9	$	2,965.2	Color, Additives and Inks	$	2,718.5	$	2,965.2
Specialty Engineered Materials	Specialty Engineered Materials	783.3		771.0		Specialty Engineered Materials	2,317.3		771.0
Distribution		404.3		384.9

Corporate and eliminations	Corporate and eliminations	922.1		876.1		Corporate and eliminations	903.5		878.8

Assets held for sale						Assets held for sale	$	367.8	$	382.2
Total assets	Total assets	$	5,043.6	$	4,997.2	Total assets	$	6,307.1	$	4,997.2

Note 10 — COMMITMENTS AND CONTINGENCIES

We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ~~ensure~~support safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows.

In September 2007, the United States District Court for the Western District of Kentucky (Court) in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., held that Avient must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls, Inc. (Westlake Vinyls)), together with certain defense costs of Goodrich Corporation. The rulings also provided that Avient can seek indemnification for contamination attributable to Westlake Vinyls.

~~10 AVIENT CORPORATION~~

Following the rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. We will adjust our accrual, in the future, consistent with any such future allocation of costs. Additionally, we continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement.

The environmental obligation at the site arose as a result of an agreement between The B.F. Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither Avient nor The Geon Company ever operated the facility.

14 AVIENT CORPORATION

Since 2009, Avient, along with respondents Westlake Vinyls, and Goodrich Corporation, has worked with the United States Environmental Protection Agency (USEPA) to address contamination at the site. The USEPA issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In April 2019, the respondents signed an Administrative Settlement Agreement and Order on Consent with the USEPA to conduct the remedial design actions at the site. In February 2020, the respondents signed the agreed Consent Decree and remedial action Work Plan, which received Federal Court approval in January 2021. Our current reserve totals ~~$107.7~~$120.9 million for this matter.

During the three and ~~six~~nine months ended ~~June~~September 30, 2022, Avient recognized ~~$3.0~~$18.8 million and ~~$5.0~~$23.8 million of expense, respectively, related to environmental remediation costs, compared to ~~$12.5~~$9.4 million and ~~$13.0~~$22.4 million recognized during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

During the three and ~~six~~nine months ended ~~June~~September 30, 2022, Avient received ~~$7.6~~$0.1 million and ~~$8.2~~$8.3 million, respectively, of insurance recoveries for previously incurred environmental costs. During the ~~six~~nine months ended ~~June~~September 30, 2021, Avient received $4.5 million of insurance recoveries. These expenses and insurance recoveries are included within Cost of sales within our Condensed Consolidated Statements of Income.

Our Condensed Consolidated Balance Sheets include accruals totaling ~~$119.9~~$131.6 million and $124.5 million as of ~~June~~September 30, 2022 and December 31, 2021, respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other current liabilities and Other non-current liabilities on the accompanying Condensed Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at ~~June~~September 30, 2022. However, such additional costs, if any, cannot be currently estimated.

Avient is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, product claims, personal injuries, and employment related matters. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes our current reserves are appropriate and these matters will not have a material adverse effect on the condensed consolidated financial statements.

Note 11 — DERIVATIVES AND HEDGING

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. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. In accordance with ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), that ongoing assessment will be done qualitatively for highly effective relationships.

Net Investment Hedge

As a means of mitigating the ~~future~~ impact of currency fluctuations on our euro investments in foreign entities, we ~~enter into~~have executed cross currency swaps, in which we ~~generally~~ pay fixed-rate interest in euros and receive fixed-rate interest in U.S. ~~dollars. In April and May 2022, we settled €1.0 billion of~~dollars related to our ~~existing cross currency swaps and concurrently entered into €1.1 billion of new cross currency swaps,~~future obligations to ~~align with our planned financing of the Dyneema Acquisition, receiving cash proceeds of $75.1 million.~~ exchange euros for U.S. dollars.

We currently ~~have 11~~hold cross currency swaps with a combined notional amount of ~~€1.4 billion with maturities~~€1,467.2 million, maturing in ~~2023~~May 2025 and ~~2028.~~ €900.0 million maturing in August 2027. We received cash proceeds of $62.8 million and $132.1 million related to the settlement of prior cross-currency swap positions during the three and nine months ended September 30, 2022, respectively.

These cross currency swaps effectively convert a portion of our U.S. dollar denominated fixed-rate debt to euro denominated fixed-rate debt. Included in Interest expense, net within the

~~11 AVIENT CORPORATION~~

Condensed Consolidated Statements of Income are gains of ~~$7.0~~$8.0 million and ~~$12.6~~$20.6 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, compared to gains of ~~$3.5~~$3.8 million and ~~$7.0~~$10.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

15 AVIENT CORPORATION

We designated the cross currency swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized within Accumulated Other Comprehensive Income (AOCI) to offset the changes in the values of the net investment being hedged. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, gains of ~~$45.2~~$98.2 million and ~~$52.0~~$150.2 million were recognized within translation adjustments in AOCI, net of tax, respectively, compared to a loss of ~~$5.2~~$7.1 million and a gain of ~~$17.7~~$24.8 million, net of tax, for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively.

Derivatives Designated as Cash Flow Hedging Instruments

In August 2018, we entered into 2two interest rate swaps with a combined notional amount of $150.0 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $150.0 million of our floating rate debt to a fixed rate. We began to receive floating rate interest payments based upon one-month U.S. dollar LIBOR and in return are obligated to pay interest at a fixed rate of 2.732% until November 2022. We have designated these interest rate swap contracts as cash flow hedges pursuant to ASC Topic 815, Derivatives and Hedging. The net interest payments accrued each month for these highly effective hedges are reflected in net income as adjustments of interest expense and the remaining change in the fair value of the derivatives is recorded as a component of AOCI. The amount of expense recognized within Interest expense, net in our Condensed Consolidated Statements of Income was ~~$0.6~~$0.1 million and ~~$1.6~~$1.7 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, compared to $1.0 million and ~~$2.0~~$3.0 million for the three and ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, gains of ~~$0.9~~$0.2 million and ~~$2.1~~$2.3 million, net of tax, respectively, were recognized in AOCI, compared to gains of $0.7 million ~~$1.5~~and $2.2 million for the three and ~~six~~nine months ended ~~June~~September 30, ~~2021.~~2021, respectively.

Derivatives Not Designated for Hedge Accounting

On April 20, 2022, we executed ~~additional~~forward starting cross currency swaps, pursuant to which we will pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars with a combined notional amount of ~~€900~~€900.0 million, ~~which mature in April 2028,~~ as a means of mitigating the impact of currency fluctuations on our future euro investments in foreign entities related to the ~~Dyneema~~APM Acquisition. Additionally, we entered into foreign currency forward contracts with an aggregate notional amount of €350 million, ~~which are scheduled to mature within one year,~~ to mitigate the impact of currency fluctuations on the euro-denominated ~~Purchase Price~~purchase price for the ~~Dyneema~~APM Acquisition. In conjunction with the closing of the APM Acquisition, we completed the initial exchange of U.S. dollars for euros as part of the cross-currency swaps and designated these instruments as a net investment hedge against the acquired euro net assets of APM. Changes in the fair value of the cross-currency swaps prior to designation as a net investment hedge and foreign exchange forward contracts ~~are~~were recorded in earnings directly. Beginning September 1, 2022, changes in the fair value of these instruments are recognized in AOCI and offset the changes in our euro net assets. The amount of ~~income~~expense recognized within Other income, net in our Condensed Consolidated Statements of Income was ~~$0.9~~$38.2 million and $37.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, which resulted in a $38.8 million cash payment during the three months ended September 30, 2022.

All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts present value using market based observable inputs, including interest rate curves and foreign currency rates.

The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows:

(In millions) Balance Sheet Location
As of
June 30, 2022
As of December 31, 2021
Assets
Cross Currency Swaps (Net Investment Hedge) Other current assets $ 22.6 $ —
Cross Currency Swaps (Net Investment Hedge) Other non-current assets 10.9 31.7
Mark-to-Market Cross Currency Swaps Other non-current assets 13.0 —
Liabilities
Interest Rate Swaps (Cash Flow Hedge) Other current liabilities $ 0.2 $ 3.1
Mark-to-Market Foreign Exchange Forwards Other current liabilities 12.1 —


(In millions)	Balance Sheet Location	As of September 30, 2022		As of December 31, 2021
Assets
Interest Rate Swaps (Cash Flow Hedge)	Other current assets	$	0.1	$	—

Cross Currency Swaps (Net Investment Hedge)	Other non-current assets	103.3		31.7

Liabilities
Interest Rate Swaps (Cash Flow Hedge)	Other current liabilities	$	—	$	3.1

1216 AVIENT CORPORATION

Note 12 — SUBSEQUENT EVENTS

Divestiture of Distribution Business

As previously announced, on August 11, 2022, the Company entered into the Purchase Agreement with the Purchaser, an affiliate of H.I.G. Capital. Pursuant to the terms of the Purchase Agreement, the Purchaser agreed to acquire the Company’s Distribution business for $950.0 million in cash, subject to a customary working capital adjustment. On November 1, 2022, the Company completed the sale of its Distribution business to the Purchaser pursuant to the terms of the Purchase Agreement.

Debt Repayment

The after-tax proceeds from the sale of the Distribution business are being used to redeem the entire outstanding $600.0 million aggregate principal amount of its 5.25% Senior Notes due March 15, 2023. The notes are being redeemed at a redemption price equal to 101.0% of the principal amount of the notes plus accrued and unpaid interest to the redemption date.

Additionally, the Company is using $150.0 million of the Distribution business after-tax proceeds to repay a portion of its senior secured term loans.

During July 2022, we settled €2.3 billion of our existing 2023 and 2025 cross-currency swaps and concurrently entered into €2.4 billion of new cross currency swaps, receiving cash proceeds of $65.6 million.

1317 AVIENT CORPORATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Business

We are a premier provider of specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Our products include specialty engineered materials, advanced composites, ultra light weight and highly engineered fibers, and color and additive ~~systems and polymer distribution. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, and fluoropolymer and silicone colorants.~~systems. Headquartered in Avon Lake, Ohio, we have employees at sales, manufacturing and distribution facilities across the globe. 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. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation ~~formerly known as PolyOne Corporation,~~ and its consolidated subsidiaries.

Highlights and Executive Summary

A summary of Avient’s sales, operating income, net (loss) income and net (loss) income attributable to Avient common shareholders follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2022		2021		2022		2021
Sales	Sales	$	1,302.4	$	1,235.2	$	2,596.2	$	2,397.5	Sales	$	823.3	$	818.0	$	2,606.5	$	2,508.5
Operating income	Operating income	129.5		108.1		258.1		228.5		Operating income	40.6		52.8		242.9		229.6
Net (loss) income from continuing operations										Net (loss) income from continuing operations	(27.8)		33.4		99.7		144.0
Income from discontinued operations, net of income taxes										Income from discontinued operations, net of income taxes	17.1		19.2		58.8		57.7
Net (loss) income										Net (loss) income	$	(10.7)	$	52.6	$	158.5	$	201.7

Net income		$	84.7	$	69.4	$	169.2	$	149.1

Net income attributable to Avient common shareholders		$	84.7	$	68.8	$	168.9	$	148.1
Net (loss) income attributable to Avient common shareholders										Net (loss) income attributable to Avient common shareholders	$	(10.3)	$	52.9	$	158.6	$	201.0

Trends and Developments

APM Acquisition

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 15 times stronger than steel and 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 Avient Protective Materials and APM. The APM Acquisition will enhance Avient's material offerings of composites and engineered fibers.

Total consideration paid by the Company to complete the APM Acquisition was $1.4 billion, net of cash acquired. Avient incurred (i) $575.0 million of borrowings under the 2029 Term Loan and (ii) $725.0 million aggregate principal of the 2030 Notes to fund the Acquisition. For additional details relating to the financing, refer to Note 8, Financing Arrangements.

Distribution business sale

On August 11, 2022, Avient entered into a definitive asset purchase agreement (the "Purchase Agreement") with an affiliate of H.I.G. Capital (the "Purchaser"), to sell its Distribution business. Pursuant to the terms of the Purchase Agreement, the Purchaser has agreed to acquire the Company's Distribution business for $950.0 million in cash, subject to a customary working capital adjustment. The Distribution business is now classified as a discontinued operation within the Condensed Consolidated Statements of Income.

Magna Colours Acquisition

On July 1, 2021, the Company completed its acquisition of Magna Colours, a market leader in sustainable, water-based inks technology for the textile screen printing industry, for the purchase price of $47.6 million, net of cash acquired. The results of the Magna Colours business are reported in the Color, Additives and Inks segment. The preliminary purchase price allocation resulted in intangible assets of $27.5 million and goodwill of $22.0 million, partially offset by net liabilities assumed. Goodwill is not deductible for tax purposes. The intangible assets that have been acquired are being amortized over a period of 10 to 20 years.

18 AVIENT CORPORATION

COVID-19

We have continued to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it has impacted our employees, customers, supply chain and distribution network. Although we are unable to predict the ultimate impact of the COVID-19 outbreak at this time, the pandemic has in the past adversely affected, and could in the future adversely affect our business. While we concluded there were no indicators of impairment as of June 30, 2022, any significant sustained adverse change in financial results or macroeconomic conditions could result in future impairments of long-lived assets. The extent to which our operations may continue to be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact.

~~Dyneema Acquisition~~

On April 19, 2022, we entered into a signing protocol (the Signing Protocol) with Koninklijke DSM N.V., a public limited liability company incorporated under the laws of the Netherlands (DSM). Pursuant to the terms of the Signing Protocol, Avient and DSM agreed that, after completion of the consultation process with the relevant Dutch works council, they woulld enter into a Sale and Purchase Agreement (the Purchase Agreement) pursuant to which Avient will, among other things, acquire from DSM (a) all of the equity of DSM Protective Materials International B.V., a private limited liability company organized under the laws of the Netherlands, DSM Protective Materials B.V., a private limited liability company organized under the laws of the Netherlands, and DSM Protective Materials LLC, a Delaware limited liability company, and (b) certain other assets related to DSM's protective materials business (including the Dyneema© Brand) (such equity and assets together, the Dyneema Business) (such acquisition of the Dyneema Business, the Dyneema Acquisition). Avient and DSM entered into the Purchase Agreement on June 23, 2022.

Pursuant to the terms of the Purchase Agreement, we have agreed to acquire the Dyneema Business for an aggregate purchase price of €1.38 billion, subject to certain customary adjustments for a European “locked box” transaction (the Purchase Price). Certain Purchase Price payments are euro-denominated and are subject to change based on fluctuations in the euro-U.S. dollar exchange rate. The closing of the Dyneema Acquisition will be subject to the satisfaction or waiver of customary and other conditions. We have received all required regulatory approvals.

~~14 AVIENT CORPORATION~~

~~In conjunction with our intent to acquire the Dyneema Business, we are exploring a potential sale of our Distribution business.~~

~~Magna Colours Acquisition~~

On July 1, 2021, the Company completed its acquisition of Magna Colours Ltd. (Magna Colours), a market leader in sustainable, water-based inks technology for the textile screen printing industry, for the purchase price of $47.6 million, net of cash acquired. The results of the Magna Colours business are reported in the Color, Additives and Inks segment. The purchase price allocation resulted in intangible assets of $27.5 million and goodwill of $22.0 million, partially offset by net liabilities assumed. Goodwill is not deductible for tax purposes. The intangible assets that have been acquired are being amortized over a period of 10 to 20 years. Purchase accounting was finalized as of June 30, 2022.

Results of Operations — The three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to three and ~~six~~nine months ended ~~June~~September 30, 2021:

Three Months Ended June 30, Variances — Favorable (Unfavorable) Six Months
Ended June 30, Variances —
Favorable (Unfavorable)
(Dollars in millions, except per share data) 2022 2021 Change %
Change 2022 2021 Change %
Change
Sales $ 1,302.4 $ 1,235.2 $ 67.2 5 % $ 2,596.2 $ 2,397.5 $ 198.7 8 %
Cost of sales 998.6 946.5 (52.1) (6) % 1,998.7 1,806.4 (192.3) (11) %
Gross margin 303.8 288.7 15.1 5 % 597.5 591.1 6.4 1 %
Selling and administrative expense 174.3 180.6 6.3 3 % 339.4 362.6 23.2 6 %
Operating income 129.5 108.1 21.4 20 % 258.1 228.5 29.6 13 %
Interest expense, net (16.2) (19.5) 3.3 17 % (33.1) (38.8) 5.7 15 %
Other income, net 1.4 1.2 0.2 nm 0.8 2.7 (1.9) nm
Income before income taxes 114.7 89.8 24.9 28 % 225.8 192.4 33.4 17 %
Income tax expense (30.0) (20.4) (9.6) (47) % (56.6) (43.3) (13.3) (31) %
Net income 84.7 69.4 15.3 22 % 169.2 149.1 20.1 13 %
Net income attributable to noncontrolling interests — (0.6) 0.6 nm (0.3) (1.0) 0.7 nm
Net income attributable to Avient common shareholders $ 84.7 $ 68.8 $ 15.9 23 % $ 168.9 $ 148.1 $ 20.8 14 %
Earnings per share attributable to Avient common shareholders - Basic $ 0.93 $ 0.75 $ 1.85 $ 1.62
Earnings (loss) per share attributable to Avient common shareholders - Diluted $ 0.92 $ 0.74 $ 1.83 $ 1.60


	Three Months Ended September 30,				Variances — Favorable (Unfavorable)				Nine Months Ended September 30,				Variances — Favorable (Unfavorable)
(Dollars in millions, except per share data)	2022		2021		Change		% Change		2022		2021		Change		% Change
Sales	$	823.3	$	818.0	$	5.3	0.6	%	$	2,606.5	$	2,508.5	$	98.0	3.9	%
Cost of sales	627.9		602.4		(25.5)		(4.2)	%	1,895.8		1,781.2		(114.6)		(6.4)	%
Gross margin	195.4		215.6		(20.2)		(9.4)	%	710.7		727.3		(16.6)		(2.3)	%
Selling and administrative expense	154.8		162.8		8.0		4.9	%	467.8		497.7		29.9		6.0	%

Operating income	40.6		52.8		(12.2)		(23.1)	%	242.9		229.6		13.3		5.8	%
Interest expense, net	(37.3)		(19.0)		(18.3)		(96.3)	%	(70.4)		(57.8)		(12.6)		(21.8)	%

Other (expense) income, net	(32.3)		1.6		(33.9)		nm		(31.3)		4.3		(35.6)		nm
(Loss) Income from continuing operations before income taxes	(29.0)		35.4		(64.4)		(181.9)	%	141.2		176.1		(34.9)		(19.8)	%
Income tax benefit (expense)	1.2		(2.0)		3.2		160.0	%	(41.5)		(32.1)		(9.4)		(29.3)	%
Net (loss) income from continuing operations	(27.8)		33.4		(61.2)		(183.2)	%	99.7		144.0		(44.3)		(30.8)	%
Income from discontinued operations, net of income taxes	17.1		19.2		(2.1)		nm		58.8		57.7		1.1		nm
Net (loss) income	(10.7)		52.6		(63.3)		(120.3)	%	158.5		201.7		(43.2)		(21.4)	%
Net loss (income) attributable to noncontrolling interests	0.4		0.3		0.1		nm		0.1		(0.7)		0.8		nm
Net (loss) income attributable to Avient common shareholders	$	(10.3)	$	52.9	$	(63.2)	(119.5)	%	$	158.6	$	201.0	$	(42.4)	(21.1)	%

(Loss) Earnings per share attributable to Avient common shareholders - Basic
Continuing operations	$	(0.30)	$	0.37					$	1.09	$	1.57
Discontinued operations	0.19		0.21						0.65		0.63
Total	$	(0.11)	$	0.58					$	1.74	$	2.20

(Loss) earnings per share attributable to Avient common shareholders - Diluted
Continuing operations	$	(0.30)	$	0.37					$	1.08	$	1.56
Discontinued operations	0.19		0.20						0.64		0.62
Total	$	(0.11)	$	0.57					$	1.72	$	2.18

nm - not meaningful

Sales

Sales increased ~~$67.2~~$5.3 million ~~and $198.7 million~~or 0.6% in the three ~~and six~~ months ended ~~June~~September 30, 2022 ~~respectively,~~ compared to the three ~~and six~~ months ended ~~June~~September 30, ~~2021 as~~2021. The acquisition of APM increased sales by 3.9%, while foreign exchange negatively impacted sales 7.1%. The remaining increase was primarily a result of ~~growth in the healthcare and consumer end markets, certain composite applications, and~~ price increases associated with raw material ~~inflation. These increases were partially~~inflation, which more than offset ~~by decreased demand~~lower global demand.

19 AVIENT CORPORATION

Sales increased $98.0 million or 3.9% in ~~China as~~the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The acquisition of APM increased sales 1.6% while foreign exchange negatively impacted sales 5.3%. The remaining increase was primarily a result of ~~the recent COVID-19 lockdowns as well as weaker foreign exchange rates primarily from the euro.~~price increases associated with raw material inflation, which more than offset lower demand.

Cost of sales

As a percent of sales, cost of sales increased ~~slightly~~ from ~~76.6%~~73.6% to ~~76.7%~~76.3% in the three months ended ~~June~~September 30, 2021 to ~~June~~September 30, ~~2022.~~2022, primarily as a result of raw material inflation, acquisition related costs and higher environmental remediation costs. Cost of sales as a percent of sales increased from ~~75.3%~~71.0% to ~~77.0%~~72.7% in the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~June~~September 30, 2022, primarily as a result of ~~cost inflation.~~raw material inflation and acquisition related costs.

Selling and administrative expense

Selling and administrative expense decreased ~~$6.3~~$8.0 million and ~~$23.2~~$29.9 million during the three and ~~six~~nine months ended ~~June~~September 30, 2022 ~~respectively,~~ compared to the three and ~~six~~nine months ended ~~June~~September 30, 2021, ~~driven primarily~~as the impact from the APM Acquisition of $7.1 million was more than offset by weaker foreign exchange ~~rates~~ and lower ~~incentive accruals.~~compensation cost.

Interest expense, net

Interest expense, net increased $18.3 million and $12.6 million in the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021 related to the 2030 Notes and 2029 Term Loan issued in the third quarter along with the $10.0 million of committed financing costs incurred in the third quarter 2022 associated with the APM Acquisition.

Income taxes

During the three months ended September 30, 2022, the effective tax rate benefit from continuing operations of 4.1% was below the U.S. federal statutory rate of 21.0%. The tax rate benefit relates to a pretax loss as well as state income tax benefits, prior year favorable U.S. return-to-provision adjustments and the U.S. research and development tax credit. These favorable items were partially offset by foreign withholding tax liabilities accrued associated with the future repatriation of certain foreign earnings, global intangible low-taxed income (GILTI) tax, certain non-deductible expenses and an increase in valuation allowances.

During the nine months ended September 30, 2022, the Company’s effective tax rate from continuing operations of 29.4% was above the U.S. federal statutory rate of 21.0% primarily due to foreign withholding tax liabilities accrued associated with the future repatriation of certain foreign earnings, GILTI tax, certain non-deductible expenses and an increase in valuation allowances. These unfavorable items were partially offset by prior year favorable U.S. return-to-provision adjustments and the U.S. research and development tax credit.

During the three and nine months ended September 30, 2021, the Company's effective tax rates from continuing operations of 5.7% and 18.2%, respectively, were below the U.S. federal statutory rate of 21.0% primarily due to higher U.S. foreign-derived intangible income (FDII) tax benefits, favorable prior year U.S. return-to-provision adjustments and U.S. research and development tax credit. These favorable items were partially offset by foreign withholding tax liabilities accrued associated with the repatriation of certain foreign earnings and GILTI tax.

SEGMENT INFORMATION

Avient has two reportable segments: (1) Color, Additives and Inks; and (2) Specialty Engineered Materials. As a result of the agreement to divest the Distribution business segment, we have removed Distribution as a separate reportable segment and its results are presented as discontinued operation. Historical information has been retrospecitvely adjusted to reflect these changes. Discontinued operations are further discussed in Note 3, Discontinued Operations, to the accompanying condensed consolidated financial statements.

1520 AVIENT CORPORATION

~~Interest expense, net~~

Interest expense, net decreased $3.3 million and $5.7 million in the three and six months ended June 30, 2022, respectively, compared to the three and six months ended June 30, 2021 due to additional cross currency swaps (See Note 11, ~~Derivatives and Hedging~~ ~~for details).~~

~~Income taxes~~

During the three and six months ended June 30, 2022, the Company’s effective tax rate was 26.1% and 25.0%, respectively, compared to 22.6% and 22.5% for the three and six months ended June 30, 2021, respectively. The income tax rate increase is primarily due to the higher global intangible low-taxed income (GILTI) tax in 2022 compared to 2021 and a favorable impact from foreign tax rate change for the three and six months ended June 30, 2021 not repeated in 2022.

~~SEGMENT INFORMATION~~

~~Avient has three reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; and (3) Distribution.~~ 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; 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; gains and losses on the divestiture of joint ventures and equity investments; 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 and eliminations.

Sales and Operating Income — The three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to the three and ~~six~~nine months ended ~~June~~September 30, 2021:


		Three Months Ended June 30,						Variances — Favorable (Unfavorable)				Six Months Ended June 30,						Variances — Favorable (Unfavorable)					Three Months Ended September 30,						Variances — Favorable (Unfavorable)				Nine Months Ended September 30,						Variances — Favorable (Unfavorable)
(Dollars in millions)	(Dollars in millions)	2022			2021			Change		% Change		2022			2021			Change		% Change		(Dollars in millions)	2022			2021			Change		% Change		2022			2021			Change		% Change
Sales:	Sales:																					Sales:
Color, Additives and Inks	Color, Additives and Inks	$	649.1		$	624.4		$	24.7	4	%	$	1,298.6		$	1,233.7		$	64.9	5	%	Color, Additives and Inks	$	565.6		$	586.6		$	(21.0)	(3.6)	%	$	1,864.2		$	1,820.3		$	43.9	2.4	%
Specialty Engineered Materials	Specialty Engineered Materials	243.9			240.6			3.3		1	%	488.6			457.1			31.5		7	%	Specialty Engineered Materials	258.2			231.7			26.5		11.4	%	743.6			685.3			58.3		8.5	%
Distribution		443.2			404.4			38.8		10	%	876.1			767.1			109.0		14	%

Corporate and eliminations	Corporate and eliminations	(33.8)			(34.2)			0.4		1	%	(67.1)			(60.4)			(6.7)		(11)	%	Corporate and eliminations	(0.5)			(0.3)			(0.2)		(66.7)	%	(1.3)			2.9			(4.2)		144.8	%
Total Sales	Total Sales	$	1,302.4		$	1,235.2		$	67.2	5	%	$	2,596.2		$	2,397.5		$	198.7	8	%	Total Sales	$	823.3		$	818.0		$	5.3	0.6	%	$	2,606.5		$	2,508.5		$	98.0	3.9	%

Operating income:	Operating income:																					Operating income:
Color, Additives and Inks	Color, Additives and Inks	$	93.6		$	86.3		$	7.3	8	%	$	188.1		$	175.1		$	13.0	7	%	Color, Additives and Inks	$	68.6		$	66.8		$	1.8	2.7	%	$	256.7		$	241.9		$	14.8	6.1	%
Specialty Engineered Materials	Specialty Engineered Materials	36.6			37.3			(0.7)		(2)	%	76.3			71.5			4.8		7	%	Specialty Engineered Materials	31.4			30.0			1.4		4.7	%	104.9			98.4			6.5		6.6	%
Distribution		27.1			23.7			3.4		14	%	51.3			47.7			3.6		8	%

Corporate and eliminations	Corporate and eliminations	(27.8)			(39.2)			11.4		29	%	(57.6)			(65.8)			8.2		12	%	Corporate and eliminations	(59.4)			(44.0)			(15.4)		(35.0)	%	(118.7)			(110.7)			(8.0)		(7.2)	%
Total Operating Income	Total Operating Income	$	129.5		$	108.1		$	21.4	20	%	$	258.1		$	228.5		$	29.6	13	%	Total Operating Income	$	40.6		$	52.8		$	(12.2)	(23.1)	%	$	242.9		$	229.6		$	13.3	5.8	%

Operating income as a percentage of sales:	Operating income as a percentage of sales:																					Operating income as a percentage of sales:
Color, Additives and Inks	Color, Additives and Inks	14.4		%	13.8		%	0.6		% points		14.5		%	14.2		%	0.3		% points		Color, Additives and Inks	12.1		%	11.4		%	0.7		% points		13.8		%	13.3		%	0.5		% points
Specialty Engineered Materials	Specialty Engineered Materials	15.0		%	15.5		%	(0.5)		% points		15.6		%	15.6		%	—		% points		Specialty Engineered Materials	12.2		%	12.9		%	(0.7)		% points		14.1		%	14.4		%	(0.3)		% points
Distribution		6.1		%	5.9		%	0.2		% points		5.9		%	6.2		%	(0.3)		% points

Total	Total	9.9		%	8.8		%	1.1		% points		9.9		%	9.5		%	0.4		% points		Total	4.9		%	6.5		%	(1.6)		% points		9.3		%	9.2		%	0.1		% points

Color, Additives and Inks

Sales decreased $21.0 million or 3.6% in the three months ended September 30, 2022 compared to the three months ended September 30, 2021. Foreign exchange negatively impacted sales 7.7%, while price increases associated with raw material inflation more than offset lower global demand.

Sales increased ~~$24.7~~by $43.9 million or 2.4% in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Foreign exchange negatively impacted sales by 5.6%, while price increases associated with raw material inflation, along with the acquisition of Magna Colours, more than offset lower demand.

Operating income increased $1.8 million and ~~$64.9~~$14.8 million in the three and ~~six~~nine months ended ~~June~~September 30, 2022 compared to the three and ~~six~~nine months ended ~~June~~September 30, 2021, ~~due~~respectively. Operating income increased as a result of the aforementioned pricing combined with benefits from lower selling and administrative expenses and synergies from acquisitions. These benefits were partially offset by inflation, negative impacts of foreign exchange and lower demand, which began to ~~higher selling prices across all regions and~~accelerate towards the end ~~markets.~~of the third quarter.

Specialty Engineered Materials

Sales increased $26.5 million or 11.4% in the three months ended September 30, 2022 compared to the three months ended September 30, 2021. The acquisition of APM increased sales by 13.9%, while foreign exchange negatively impacted sales 5.6%. The remaining increase was a result of price increases associated with raw material inflation, which more than offset lower global demand.

1621 AVIENT CORPORATION

~~Healthcare growth~~Sales increased $58.3 million or 8.5% in the ~~Americas offset~~nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The acquisition of APM increased sales ~~declines~~4.7%, while foreign exchange negatively impacted sales 4.4%. The remaining increase was primarily a result of price increases associated with ~~the COVID-19 shutdown in China and the ongoing war in Ukraine. Additionally, unfavorable foreign exchange rates also reduced sales.~~raw material inflation, which more than offset lower global demand.

Operating income increased ~~$7.3~~$1.4 million and ~~$13.0~~$6.5 million in the three and ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the three and ~~six~~nine months ended ~~June~~September 30, ~~2021, respectively. The operating~~2021. Operating income ~~growth was driven by~~increased as a result of the aforementioned ~~sales growth,~~pricing combined with the acquisition of APM and lower selling ~~general~~ and administrative ~~expenses driven~~expense. These benefits were partially offset by ~~synergies from acquisitions~~inflation, negative impacts of foreign exchange and lower ~~incentives. These benefits more than offset weaker foreign exchange rates~~demand which began to accelerate towards the end of the third quarter.

Corporate and ~~cost inflation.~~Eliminations

~~Specialty Engineered Materials~~

~~Sales~~Costs increased ~~$3.3~~$15.4 million and $31.5 million in the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021. Higher selling prices associated with raw material inflation and growth in composite applications more than offset weaker foreign exchange rates along with lower demand in China and certain outdoor high performance applications.

~~Operating income was down slightly as higher pricing offset the impact of unfavorable mix, and higher cost inflation~~or 35% in the three months ended ~~June~~September 30, 2022 as compared to the three months ended ~~June~~September 30, ~~2021. Operating income~~2021 due to higher environmental remediation costs of $9.4 million, and higher acquisition costs of $13.2 million, partially offset by lower incentive costs. Costs increased ~~$4.8~~$8.0 million or 7% in the ~~six~~nine months ended ~~June~~September 30, 2022 as compared to the ~~six~~nine months ended ~~June~~September 30, 2021 due to ~~aforementioned sales increases from~~ higher ~~selling prices and growth in composite applications.~~

~~Distribution~~

~~Sales increased $38.8~~acquisition costs of $15.1 million, ~~and $109.0 million in the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021, respectively, driven~~partially offset by ~~increased average selling prices.~~

Operating income increased $3.4 million and $3.6 million in the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, respectively, due to higher selling prices.

~~Corporate and Eliminations~~

Costs decreased $11.4 million, or 29%, and $8.2 million, or 12% in the three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021 due to lower environmental remediation costs and higher insurance recoveries on previously incurred environmental costs, as well as lower incentive ~~accruals.~~costs.

Liquidity and Capital Resources

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.

The following table summarizes our liquidity as of ~~June~~September 30, 2022 and December 31, 2021:


(In millions)	(In millions)	As of June 30, 2022		As of December 31, 2021		(In millions)	As of September 30, 2022		As of December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	645.1	$	601.2	Cash and cash equivalents	$	544.4	$	601.2
Revolving credit availability	Revolving credit availability	487.1		485.5		Revolving credit availability	485.1		485.5
Liquidity	Liquidity	$	1,132.2	$	1,086.7	Liquidity	$	1,029.5	$	1,086.7

As of ~~June~~September 30, 2022, approximately ~~69%~~50% of the Company’s cash and cash equivalents resided outside the United States.

In connection with the Dyneema Acquisition, on April 19, 2022, we entered into a Commitment Letter with Morgan Stanley Senior Funding, Inc. and J.P. Morgan (the Commitment Parties), pursuant to which the Commitment Parties committed to providing us with a $640.0 million senior secured term loan facility and a $900.0 million senior unsecured bridge loan (the Bridge Facility) for purposes of funding the Dyneema Acquisition. The commitment is subject to various conditions, including the execution of definitive documentation and other customary closing conditions. We currently intend to issue new senior long-term debt in lieu of borrowing under the Bridge Facility.

Expected sources of cash needed to satisfy cash requirements for the remainder of 2022 ~~outside of the Dyneema Acquisition~~ include our cash on hand, proceeds from the sale of the Distribution business, cash from operations and available liquidity under our revolving credit facility, if needed. ~~Outside of the Dyneema Acquisition, expected~~Expected uses of cash for the remainder of 2022 include the repayment of debt, interest

~~17 AVIENT CORPORATION~~

payments, cash taxes, dividend payments, share repurchases, environmental remediation costs, and capital ~~expenditures, and repayment of debt.~~expenditures.

Cash Flows

The following describes the significant components of cash flows from operating, investing and financing activities for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021.

Operating Activities — In the ~~six~~nine months ended ~~June~~September 30, 2022, net cash provided by operating activities was ~~$106.7~~$223.9 million as compared to ~~$68.1~~$110.0 million for the ~~six~~nine months ended ~~June~~September 30, 2021, driven primarily by ~~increased earnings and~~ lower ~~comparative investment in~~ working ~~capital.~~capital, partially offset by costs incurred associated with the APM Acquisition.

Investing Activities — Net cash ~~provided~~used by investing activities during the ~~six~~nine months ended ~~June~~September 30, 2022 of ~~$41.1~~$1,387.9 million reflects ~~$75.1~~the acquisition of APM of $1,426.1 million, ~~associated with~~capital expenditures of $55.1 million, offset by the settlement of cross-currency swaps ~~partially offset by capital expenditures.~~of $93.3 million.

Net cash used by investing activities during the ~~six~~nine months ended ~~June~~September 30, 2021 of ~~$44.1~~$112.3 million primarily reflects capital ~~expenditures.~~expenditures and the acquisition of Magna Colours.

22 AVIENT CORPORATION

Financing Activities — Net cash ~~used~~provided by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2022 of ~~$88.4~~$1,138.1 million primarily reflects ~~$43.5~~$1,300.0 million of debt proceeds, $65.2 million of dividends paid, ~~and~~debt financing costs of $49.3 million, repayment of debt of $6.8 million, repurchases of our outstanding common shares of $36.4 million, and the payment of withholding tax on share awards of $4.2 million.

Net cash used by financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 of ~~$51.6~~$91.5 million ~~primarily~~ reflects ~~$38.8~~repayment of long-term debt of $16.5 million, $58.2 million of dividends paid, repurchases of our outstanding common shares of $4.2 million, and the payment of withholding tax on share awards of $9.1 million.

Debt

As of ~~June~~September 30, 2022, our principal amount of debt totaled ~~$1,868.8~~$3,166.4 million. Aggregate maturities of the principal amount of debt for the current year, next four years and thereafter, are as follows:


(In millions)	(In millions)			(In millions)
2022	2022	$	4.1	2022	$	3.2
2023	2023	608.6		2023	614.3
2024	2024	8.6		2024	14.3
2025	2025	658.7		2025	664.4
2026	2026	6.9		2026	12.6
Thereafter	Thereafter	581.9		Thereafter	1,857.6
Aggregate maturities	Aggregate maturities	$	1,868.8	Aggregate maturities	$	3,166.4

On August 10, 2022, the Company entered into an indenture with U.S. Bank Trust Company, National Association, as trustee, relating to the issuance by the Company of $725 million aggregate principal amount of 2030 Notes. The 2030 Notes were sold on August 10, 2022 in a private offering. The 2030 Notes bear interest at a rate of 7.125% per annum. Interest on the 2030 Notes is payable semi-annually in arrears on February 1 and August 1 of each year, commencing on February 1, 2023. The 2030 Notes will mature on August 1, 2030. The 2030 Notes are senior unsecured obligations of the Company.

On August 29, 2022, the Company entered into the Term Loan Amendment relating to the Credit Agreement, with Citibank, N.A., as administrative agent, and the other agents and lenders named therein. Pursuant to the Term Loan Amendment, Avient, among other things, incurred the 2029 Term Loan in an aggregate principal amount equal to $575 million. The 2029 Term Loan was fully drawn on August 29, 2022. The interest rates per annum applicable to both the 2029 Term Loan and the existing term loan under the Credit Agreement will be either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 3.25% or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 2.25%. The other terms and conditions, including the maturity date, that apply to the 2029 Term Loan are substantially the same as the terms and conditions that applied to the existing term loan under the Credit Agreement immediately prior to the Term Loan Amendment.

The Company used the net proceeds from the issuance of the 2030 Notes and the borrowings under the 2029 Term Loan to finance a portion of the consideration for the APM Acquisition.

As of ~~June~~September 30, 2022, we were in compliance with all financial and restrictive covenants pertaining to our debt. For additional information regarding our debt, please see Note 8, Financing Arrangements to the accompanying condensed consolidated financial statements.

Derivatives and Hedging

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 11, Derivatives and Hedging to the accompanying condensed consolidated financial statements.

Material Cash Requirements

We have future obligations under various contracts relating to debt and interest payments, derivative instruments, operating leases, pension and post-retirement benefit plans and purchase obligations. During the ~~six~~nine months ended ~~June~~September 30, 2022, ~~there were no material changes~~we incurred the 2029 Term Loan in an aggregate principal amount equal to ~~these~~$575 million (which was fully drawn on August 29, 2022) and issued $725 million aggregate principal amount of the 2030 Notes. These obligations are in addition to those as reported in our Annual Report on Form 10-K for the year ended December 31, 2021.

1823 AVIENT CORPORATION

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

In this Quarterly Report on Form 10-Q, statements that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management’s expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as "will," “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of future operating or financial condition, performance and/or sales. In particular, these include statements relating to future actions; prospective changes in raw material costs, product pricing or product demand; future performance; estimated capital expenditures; results of current and anticipated market conditions and market strategies; sales efforts; expenses; the outcome of contingencies such as legal proceedings and environmental liabilities; and financial results. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to:

•disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future;

•the effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory ~~risks, including recessionary conditions;~~risks;

•the current and potential future impact of the COVID-19 pandemic on our business, results of operations, financial position or cash flows, including without limitation, any supply chain and logistics issues;

•changes in ~~polymer consumption growth rates and~~ laws and regulations regarding plastics in jurisdictions where we conduct business;

•fluctuations in raw material prices, quality and supply, and in energy prices and supply;

•production outages or material costs associated with scheduled or unscheduled maintenance programs;

•unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters;

•an inability to raise or sustain prices for products or services;

•our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends;

•information systems failures and cyberattacks;

•amounts for cash and non-cash charges related to restructuring plans that may differ from original estimates, including because of timing changes associated with the underlying actions;

•~~any material adverse changes in the Dyneema Business;~~

•our ability to achieve the strategic and other objectives relating to APM;

•other factors affecting our business beyond our control, including without limitation, changes in the ~~Dyneema Acquisition~~general economy, changes in interest rates, changes in the rate of inflation and ~~the possible sale of the Distribution business segment; and~~any recessionary conditions;

•other factors described in our Annual Report on Form 10-K for the year ended December 31, 2021 under Item 1A, “Risk Factors.”

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. You are advised, however, to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed with the Securities and Exchange Commission. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to exposures to market risk as reported in our Annual Report on Form 10-K for the year ended December 31, 2021.

1924 AVIENT CORPORATION

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures

Avient’s management, under the supervision of and with the participation of its Chief Executive Officer and its Chief Financial Officer, has evaluated the effectiveness of the design and operation of Avient’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report. Based upon this evaluation, Avient’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report, its disclosure controls and procedures were effective.

The Company completed the APM Acquisition on September 1, 2022 and has not yet included APM in its assessment of the effectiveness of its internal control over financial reporting. The Company is currently integrating APM into its operations, compliance programs and internal control processes. Accordingly, pursuant to the SEC's general guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our disclosure controls and procedures does not include APM. APM constituted approximately 26% of the Company's total assets as of September 30, 2022, and approximately 1% of the Company's net sales for the nine months ended September 30, 2022.

Changes in internal control over financial reporting

There were no changes in Avient’s internal control over financial reporting during the quarter ended ~~June~~September 30, 2022 that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding certain legal proceedings can be found in Note 10, Commitments and Contingencies to the accompanying condensed consolidated financial statements and is incorporated by reference herein.

ITEM 1A. RISK FACTORS

~~The disclosure below modifies the~~We face a number of risks that could adversely affect our business, results of operations, financial position or cash flows. A discussion of our risk factors ~~previously disclosed~~can be found in Item 1A, Risk factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our subsequent Quarterly ~~Report~~Reports on Form 10-Q for the ~~quarterly period~~periods ended March 31, 2022 and June 30, 2022. ~~These risks, along with those~~During the third quarter ended September 30, 2022, there were no material changes to our previously disclosed ~~could adversely affect our business, results of operations, financial position or cash flows.~~

~~Dyneema Acquisition Risks~~

~~We may experience difficulties integrating the Dyneema Business.~~

There can be no assurance that we will successfully or cost-effectively integrate the Dyneema Business. The failure to do so could have an adverse effect on our business, financial condition, results of operations and cash flow.

~~We will incur additional debt to complete the Dyneema Acquisition. Our ability to generate cash to service this debt depends on many factors beyond our control.~~

~~At June 30, 2022, we had total debt of approximately $1,868.8 million. We expect to incur approximately $1.2 billion of debt to complete the Dyneema Acquisition.~~

Our ability to make payments on our debt, fund our other liquidity needs, and make planned capital expenditures will depend on our ability to generate cash in the future. A significant portion of our operations are conducted by our subsidiaries. Our cash flows and our ability to service our indebtedness, including our ability to pay the interest on and principal of our debt when due, may be dependent upon cash dividends and other distributions or other transfers from our subsidiaries. Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

~~The degree to which we are currently leveraged and will be leveraged following the consummation of the Dyneema Acquisition could have important consequences for shareholders.~~

~~Global Operating Risks~~

~~Higher energy costs worldwide, including as a result of the ongoing conflict between Russia and Ukraine, could adversely impact our results of operations.~~

Our results of operations can be directly affected, positively and negatively, by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control. The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to high volatility and increasing prices for crude oil, natural gas and other energy supplies. In the event that the supply of natural gas from Russia stops or is significantly reduced, there may be supply disruptions, increased prices, temporary

~~20 AVIENT CORPORATION~~

shutdowns or closures of our manufacturing facilities, or further rationing of energy supply within countries where we do business, which could have a material adverse impact on our business or results of operations in those countries. While we have developed contingency plans to flex and shift production in the case of temporary shutdowns or closures of our manufacturing facilities, we may be unable to shift all impacted operations to alternatives sites.risk factors.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below sets forth information regarding the repurchase of shares of our common shares during the period indicated.

Period Total Number of Shares Purchased Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program
Maximum Number of Shares that May Yet be Purchased Under the Program (1)
April 1 to April 30 — $ — — 5,457,472
May 1 to May 31 — — — 5,457,472
June 1 to June 30 500,000 41.24 500,000 4,957,472
Total 500,000 $ 41.24 500,000


Period	Total Number of Shares Purchased	Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares that May Yet be Purchased Under the Program (1)
July 1 to July 31	—	$	—	—	4,957,472
August 1 to August 31	—	—		—	4,957,472
September 1 to September 30	—	—		—	4,957,472
Total	—	$	—	—

(1) Our Board of Directors approved a common share repurchase program authorizing Avient to purchase its common shares in August 2008, which share repurchase authorization has been subsequently increased from time to time. On December 9, 2020, we announced that we would increase our share buyback by an additional 5 million shares. As of ~~June~~September 30, 2022, approximately 5.0 million shares remained available for purchase under these authorizations, which have no expiration. Purchases of common shares may be made by open market purchases or privately negotiated transactions and may be made pursuant to Rule 10b5-1 plans and accelerated share repurchases.

2125 AVIENT CORPORATION

ITEM 6. EXHIBITS

EXHIBIT INDEX


Exhibit No.						Exhibit Description

2.1†						Signing Protocol between Avient Corporation and Koninklijke DSM N.V., dated April 19, 2022 (including the final form of Sale and Purchase Agreement between Avient Corporation and Koninklijke DSM N.V. as Annex A)~~(incorporated by reference to Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, SEC File No. 1-16091)~~

2.2 †**						~~Sale and~~Asset Purchase Agreement, ~~of the DSM Protective Materials Business,~~dated August 11, 2022, by and ~~among Koninklijke DSM N.V.,~~between Avient Corporation and solely for the purposes of Clause 2.1 and Clause 2.2, Fiber-Line International B.V., dated June 23, 2022 (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 24, 2022, SEC File No. 1-16091)Hilo Group Buyer, LLC (n/k/a Formera, LLC)

3.1						Amended and Restated Articles of Incorporation of Avient Corporation (as amended through June 30, 2020) (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, SEC File No. 1-16091)

3.2						Amended and Restated Code of Regulations, effective June 30, 2020 (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, SEC File No. 1-16091)

4.1						Indenture, dated August 10, 2022, between Avient Corporation and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 10, 2022, SEC File No. 1-16091)

10.1						Amendment Agreement No. 7, dated as of August 29, 2022, by and among Avient Corporation, the lenders party thereto and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on September 1, 2022, SEC File No. 1-16091)

31.1						Certification of Robert M. Patterson, Chairman, President and Chief Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Jamie A. Beggs, Senior Vice President and Chief Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by Robert M. Patterson, Chairman, President and Chief Executive Officer

32.2						Certification pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as signed by Jamie A. Beggs, Senior Vice President and Chief Financial Officer

101.INS						Inline XBRL Instance Document

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†						Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K and will be provided to the Securities and Exchange Commission upon request.

**						Filed herewith.

2226 AVIENT CORPORATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



~~July 26,~~November 2, 2022			AVIENT CORPORATION

			/s/ Jamie A. Beggs
			Jamie A. Beggs Senior Vice President and Chief Financial Officer

2327 AVIENT CORPORATION


(In millions)	Balance Sheet Location	As of June 30, 2022		As of December 31, 2021
Assets
Cross Currency Swaps (Net Investment Hedge)	Other current assets	$	22.6	$	—
Cross Currency Swaps (Net Investment Hedge)	Other non-current assets	10.9		31.7
Mark-to-Market Cross Currency Swaps	Other non-current assets	13.0		—
Liabilities
Interest Rate Swaps (Cash Flow Hedge)	Other current liabilities	$	0.2	$	3.1
Mark-to-Market Foreign Exchange Forwards	Other current liabilities	12.1		—


	Three Months Ended June 30,				Variances — Favorable (Unfavorable)				Six Months Ended June 30,				Variances — Favorable (Unfavorable)
(Dollars in millions, except per share data)	2022		2021		Change		% Change		2022		2021		Change		% Change
Sales	$	1,302.4	$	1,235.2	$	67.2	5	%	$	2,596.2	$	2,397.5	$	198.7	8	%
Cost of sales	998.6		946.5		(52.1)		(6)	%	1,998.7		1,806.4		(192.3)		(11)	%
Gross margin	303.8		288.7		15.1		5	%	597.5		591.1		6.4		1	%
Selling and administrative expense	174.3		180.6		6.3		3	%	339.4		362.6		23.2		6	%

Operating income	129.5		108.1		21.4		20	%	258.1		228.5		29.6		13	%
Interest expense, net	(16.2)		(19.5)		3.3		17	%	(33.1)		(38.8)		5.7		15	%

Other income, net	1.4		1.2		0.2		nm		0.8		2.7		(1.9)		nm
Income before income taxes	114.7		89.8		24.9		28	%	225.8		192.4		33.4		17	%
Income tax expense	(30.0)		(20.4)		(9.6)		(47)	%	(56.6)		(43.3)		(13.3)		(31)	%


Net income	84.7		69.4		15.3		22	%	169.2		149.1		20.1		13	%
Net income attributable to noncontrolling interests	—		(0.6)		0.6		nm		(0.3)		(1.0)		0.7		nm
Net income attributable to Avient common shareholders	$	84.7	$	68.8	$	15.9	23	%	$	168.9	$	148.1	$	20.8	14	%

Earnings per share attributable to Avient common shareholders - Basic	$	0.93	$	0.75					$	1.85	$	1.62




Earnings (loss) per share attributable to Avient common shareholders - Diluted	$	0.92	$	0.74					$	1.83	$	1.60