Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Avient Corporation's webcast to discuss the company's 2022 fourth quarter and full year results.

My name is Katherine, and I will be your operator for today. At this time, all participants are in a listen-only mode.

We will have a question-and-answer session following the company's prepared remarks.

As a reminder, this conference is being recorded for replay purposes.

to President, call Treasurer like Di to now Vice Salvo, and would turn over the Joe I Investor Relations. proceed. Please

Joe Di Salvo

call Katherine. you, us And morning today. the to Thank everyone good on joining

be you Before we'd made webcast within Securities the like meaning remind Litigation of considered beginning, that Reform statements forward-looking Act to during statements this of Private the may XXXX.

and of expressed performance. forecasts actual are Please results to not Forward-looking differ. in risks presentation a differ and They're or the could on any to statements could factors by materially for events statement. based to give from of cause forward-looking number of cause of current future involve webcast results for management's and those uncertainties, number expectation expectations a business of investor future this implied a or which refer that actual guarantees

company describes comparable the Please the both today, measures. to company the refer discussion directly and non-GAAP their for financial most the measures financial historical and measures. Avient presentation to the will posted on provides a non-GAAP non-GAAP where financial reconciliation GAAP use During measures website, GAAP

and me Financial Joining our and President President Executive Officer, Bob is Patterson; Vice Senior Jamie Chairman, Officer, Beggs. and Chief today Chief

the over hand Bob. I'll Now, call to

Bob Patterson

morning. Joe, Thanks, good and

challenging composites, every in and That quarter impacted which and This, of adjusted $X.XX inventory demand saw adjusted EPS our of adjusted were year, Asia December EPS. and decline being in better was one in margins, a an prior Today, industry the Orders we reported nearly conditions global uptick fourth $X.XX. combination of in negatively and to quarter Dyneema said, resulting led as destocking of fourth we for EPS region, personal year-over-year exceeded expected certainly orders and EBITDA including in Europe, a the guidance $X.XX. for $XXX protection million with slightly than in used better applications.

on costs capital. reducing and working controlling focused We

at ending down by flow, rate debt this total cash free million we work million variable $XXX free to important This We've times, quarter, additional strength expectations year the $XXX generated asset previous our balance the of During of the paying year really $XXX an times. an of is through at will Net cash our to the put cash EBITDA debt. of which we million. is with X.X as extra X.X of while uncertain be these leverage ended below navigate times. ending sheet

free foreseeable to below We an near-term strong cash have and to leverage no maturities, future. in keep debt the for times objective expect XXXX deliver flow X

half for key driver the Dyneema total enabled EBITDA the is These we of transformational composites incredibly allowed size Despite the sheet our which the the challenges XXXX. down us to in with acquisition We margins significantly platform, our a the to of growth strengthen XX%, I'm and second of proud increase company; year, in what our and company Distribution sale balance improved company two the highest history. the to accomplished paying us by of of in deals completed business. debt;

part significant for of customers. and been the and of generation next our in as yet the of to years, technologies in investment glass invested resources promising replacement, In potential well markets niche the a we Growth commercial composites metal expand wood, has underserved often and early in transformation. as smaller

optic to reach components electrical XG from composites in expanded Our performance cables. fiber and applications for outdoor high

certainly down. Dyneema, than more doubled With we

expand the materials. by providing include over The products. the our to world-class fiber, benefits These customers half and also personal now of strongest more durable of leading we technologies world's SEM makes up infrastructure, really strength. and breadth marine that capabilities sustainable to the applications emissions, has been human use carbon With acquire This longevity, deliberate These segment. sustainable lighter panels, offer and market safety. while health tapes our a and increasing engineered flexible and composites improving in design freedom journey include added reducing protection, solutions energy and and fibers lowering provide stronger, that

greater type began involved The has our performance [showing] our customers. The journey It cyclical and commodity technologies substantial in the slide increase more broader that adjusted six these XXXX. XX margins and last in of in the over composites expansion over businesses underpinned specialty forma is a result platform the EPS. significant been deliver highlights pro XXXX. with years (ph) of contribution a which the technologies, sale value specialty of following investing EBITDA transformation and Clearly, last That from in Dyneema years. our to

plans driver in And each for and behind strives top-tier setters positions measure been of Ps increased in leadership as investment ourselves important us Avient of ACC Compact. we our against for standard has with Care We solutions. Global goals action the Another four XXXX such each. set sustainability. sustainability Responsible aggressive UN our sustainable have

in one proud of of our companies, be listing; has Responsible Most top scores the have to this been in us institutions, The And rating in America's third-party here and some named X,XXX Companies see annual listed since leading our in we strides out tier placing industry. were of by Avient ranked making current positive Newsweek's can We XX. agencies been organizations. other recognized you

it's proud where associates safety, diversity where on for embracing people work attributes focusing and These live by in people at we engaging we culture for invest clear, do our in sustainability in don't it and planet, actively we are thing also a and our because work. invest communities And sustainability growth. the because and developing right to drives inclusion, to we But to our the Avient, just Avient. create be invest culture

we that Protective Work a engagement associates administered Institute. are Great efforts our This business, by surveys annual well. is through that In going employee again scores is the validation very another proud And were to company. the certified validated the Materials to the our place conducted Place really engagement our fourth as the great our which survey integration we quarter, And work, from I'm employee highest very the included just achieving in of history point of this newest latest.

culture. shouldn't out everything, especially we cultures the navigate we plan because I times today importance we positioned is of you with on and like face a are underestimate strongest and recession the the other culture this come better sharing what with that's in uncertain even to believe Companies today. I'm do. to side better,

and results over closing provide provide our I'll to it now comments. I'll for and some turn then on to additional initial details some Jaime provide our XXXX, outlook XXXX

Jamie Beggs

Bob. Thank you,

the The the challenging. macro It's how and of the strength even environment culture asset, significant an acquisitions. our grown we been course through when certainly is of foundation our has strategy stay have as we especially execute

The in shared the policy Bob fourth in availability being further recover. Europe. yet Ukraine during energy the was quarter, the ahead relaxed slightly inflation concerns impacted rising about That while weakened As China about Globally, sentiment quarter to its and demand. was war said, the demand and fourth just earlier, consumer ended projections. of in negatively region interest every by policy, government region. down its have zero-COVID constrained has and rates our

as pricing with the as by as costs, The energy SG&A negative EBITDA bridge the Clariant These negative associated here actions, synergies partially higher exchange. and shown of net costs offset impact well our of well as lower benefit reduction were the foreign a Color highlights in demand, acquisition.

flow exception. an historic percentages. flow company The cash for This with dollars, slide on our while cash no enabler year dots Free being shows our conversion free cash blue represent free been chart bars this generation. represent Avient's cash has generation free flow the the flow

consistently for conversion added purposes, The and macroeconomic free we also percentage be strong flow generate flow For the environment the that cash cash to a we in line. there green illustrates continues trend. free upward comparative XXX as S&P an any data

to million free and management cash over the flow us navigate disciplined specifically with a in has below X providing strong million sheet times, allowed full resulted us working the year. Looking $XXX year during quarter of at quickly balance $XXX to This ahead. to for XXXX, capital the delever

year half, a the global the the We headwinds started two as coming $X.XX, resulted during good FX slightly and of tale weakening earnings but we XXXX, prior better of year. entered economy momentum full halves. performance Our really was year with second the in year the a record from off than

the we negative X%. the digits exchange, and sales EBITDA of and by mid-single EPS foreign increased in Excluding impact grew

consumer earnings less Russia all applications excluding mix costs applications. Europe. to EBITDA than slightly to increase Both well Clariant lower higher in as the excluding larger grew growth had and SEM to costs Color's was Color in was driven Color were energy able EBITDA SEM's of growth operating in associated foreign contributed with segments into Color demand excellence composites and as impacts XXXX X% virtually offset lower exchange, exposure in sales as year-over-year, was as able a import Europe of the sales improving ceased that pricing synergies. by the X% growth it foreign top-line exchange. in and and to our year-over-year,

slide next in in puts exchange impact demand import year and perspective the EPS sales of applications. Russia full exiting outdoor foreign in translation, high-performance This normalizing

which underlying of see, half the high-performance at plus performance below list, for top the as certain these annually of the meaningful the these the a months $XX applications at combination had I our of foreign factors euro, items several ceased, each the primarily into Russia As million on by you is Further, previously. in traded exchange the year. offset $X.XX driven of Starting A business our by of essentially were mentioned back import outdoor can solid sales influence the year. approximately exposure of in segments. normalization

is the experienced the bridge quarter. factors The inflation. on this mirrors into wage in most the perspective. we impact those the inflation late you see EBITDA Earlier, we third so year during decline and format, impressive an schedule and demand year about The fourth from can the energy What's a of and you in QX the bridge, the quarter magnitude same majority showed of of full a raw occurred material significant that however, basis.

more What than initiatives will we that is with cover you pricing early. that these extraordinary began find costs

inflation us lower have excellence which and demand. lessened focus we on benefit, In this commercial to a realize enabled fact, covered impact start since of net the XXXX of than the more has

also as the with significant the acquisition well benefits initiatives. control Clariant associated You Color see cost from as synergies

turn now Let's XXXX. to

into of recent assuming the continue are this year. demand first half We trends

weigh in on moderated have a is and has complications the about of positive fears is own we energy costs respect about consumer the sentiment We but the process the in reopening, availability foreseeable future believe will following pick energy While China increase brought it in businesses after think war Ukraine New with for that to Europe, Lunar of future. will Year. the longer-term in that an uncertainty up COVID and infections its how

jobs market indicator recent certain is positive U.S. a which certain layoff reflect the The slowing it It inflation How and the be economy, of report the many of economy. to recently that reflection changing also moderating softly appears the to remains that to in is the is made the industries rate is to strength Fed be also of interest a is the Fed respond and the a and but pace of announcements hikes. seen as tries bumpy these myriad dynamics likely doesn't by land companies. customers lagging

and to above of below in first modeling, sales year. results corresponding bottom-line prior factored the All half our the which has

We million per EPS of and $X.XX expect first quarter sales share. $XXX of adjusted

assumes under of growth, of $X.X Our and full just our share. modest modeling guidance so EPS per sales second half that is year $X.XX billion

times. strategic costs. net to in further acquisitions streamline and CapEx our of This X operating XXXX cash that million recent Europe $XXX with operations, EBITDA free generate to us expect flow under inclusive is debt particularly will of provide in allow lower to needed to integrate investments to adjusted We

in in win generate how Our we're and going efforts are this to to rooted reduce cash downturn. leverage

share, investing are cost growing create our We and strategically on in protecting focused and shareholder structure that areas long-term market value. will optimizing our

for back some turn Bob I'll it to over comments. additional

Bob Patterson

Jamie. Thanks,

little a on reports From Europe out color XXXX. improving the and Year. more flattened projections have our our a seems for customer regional offer I'll in team New perspective, to sentiment

good a thing. that's So,

local in saw And it's higher are accelerate main government consumer impacting and us and economy how to interest year, is to driver in relaxed fourth the the inflation will which is rates to COVID of in U.S. demand greater QX respond the degree slightly restrictions. than think improve a the the the could consumer unclear over We're really stimulus. we optimistic that with quarter. the China Asia, in demand for course going certainly I

time. we've And we think that on which raw In the margins respect this demand I at also our should with material for more model year, conditions, to deflation think coming months. I in that have is prudent I be are positive. balancing with clarity a been And the expect conservative just uncertain the that as candidly, to

year full and perspective, applications. in an and market be construction end From building whereas positive, consumer, telecom view likely industrial will defense, see weakness we'll that energy and further is our

improve characteristics regions doesn't for how human Organically really in and stability our provide by while There's year, the did have four possible sustainable Asia. change they are be urgent high-performance and growth December composites, key healthcare almost in made they assumptions particularly Now, will resilience composites, rate our infrastructure. really this be show health that growth a some a drivers end and our and markets pressing source to future. for of of These the and solutions, discussed outlined safety growth with long-term how need and XXXX Day more continued composite years Dyneema, that the the we contributed that the and We for of the Investor for to are projected applications businesses. down over 'XX. in expansion sustainable

customers content products often in owners, right their recyclable. solutions more made have to them seen who no make reduction thinking I'm about have for and interest asked recycled from use solutions. in commitments I I is us, how these easily real more mean, now. brand pull their are the sustainable for

In over XXXX these engagements XXXX. fact, doubled on in customer subjects

the and formulation a more that's an planet, As further material play. where enabler around we the science for need will exactly aligns world sustainable be

expected composites in are both grow and So, XXXX. solutions sustainable to

play don't be impact view care assumptions what growth spending, key and how megatrends the remote weigh impacting but year including year, longer into of seen for on rate still. the that long-term negatively expectancies, market all procedures. From really discretionary long-term is aging inflation have elective expenses we self-management, an a healthcare the population, life which I and living this may to higher this market This perspective, remains this

and specifically, on that And with believe just accordingly turn commented a China this is time. China expectations respect near-term I to knows, are can and Asia, but quickly everyone I muted, already our as of matter really

and strengthen over have have much at we The have to to streamline the to. taken the trends mega reduce future, the strengthen steps positioned. we our near-term, and I the forward operations well In these but investing us same balance we the really for look taken have and costs, to leverage last actions time, decade we're portfolio believe sheet,

in solutions, high-growth premier, our and sustainable We've industries. be specialty portfolio of to transformed a formulator with positions leading diversified

XX% in the staff to have our products and solve sales We innovative PhDs last coming greatest product over introduced challenges on an customers' XXX five maintain of offering the years. with from over

in are We color Number the One formulator the world.

We Number industries niche applications, leading outdoor for strongest high-performance in fiber and like other position the many for solutions inks. protection personal world's One used composite screen in have positions printing the

engagement for likely to during our is scores an investment truly proud to we last importantly, And place be last incredibly employee long a of least, great will The more but but time our future. not be and remembered years work three and have culture. in able To accomplishment, improve its next to challenges. list this

better to importantly, get In believe of are ever us, we win growth and we accelerate the positioned near-term but through downturn summary, challenges the in I as in than emerged. more front

these deck been while they of conversion. a our included website. and cash proposition with slides we free comparison slides slide are good industry to I reminder We're we It's our we feel asset-light value find a since an updated back business can are you who flow leading on at offer peer of the shareholders. that the the and offer

to And the long-term Our have set. highest still goal XX%. the we margins formulator EBITDA increase among to a EBITDA in margin is peer

upside been we expanding when share where with today at last in Over slides come of to encourage trade. and EBITDA our decade, Avient. with formulators about other look some our current multiple the messages time we broader spend the of to I with all context prospective listening has these the investors you

your for it questions. With open that, up I'll

Operator

first Research. question Our [Operator with from you. Mitsch Frank Thank Instructions] comes Fermium

Your line open. is

Frank Mitsch

and does you within where what and impact morning, thank seeing and curious was and stand you're for XQ, that in recap. Thank good portfolio? about the your the XQ in you, destock I

Bob Patterson

I I until don't positions, add the levels think, the is mean, first with think up. their got a want respect the that and to And really play to going I out think to they've pick their is be better destocking very I yet that's feel to sense cautious there is quarter. that going don't in I and growth like inventory customers economy to finished. to certainly are here

I do to some feel extent. flattened like Europe has out

and team just I'm a feel maybe sentiment U.S. I I'm has QX. So that conditions my feel mentioned statements I go the remarks, my of how about as in -- getting here by the like further and they Whereas to sort there. encouraged in little and bit the from

Frank Mitsch

the by first over the But quarter? end of

Bob Patterson

destocking We'll that means buying think see. mean, I I if necessarily ends, begins. that even that doesn't

So, we see I a that's likely half. first just that play the think in out have dynamic to

Frank Mitsch

kind the And guidance, Street the and expectations right how Bob. your upside point wondering frame of to relative your similar you then, guidance? was where is it, looking at to I interestingly, downside on the Appreciate XXXX the case now.

Bob Patterson

I with I -- commented remarks, we're being I conservative respect think to in that my really margins. think

I deflation. material respect to potential that raw there is think with upside

in a know, and you for of typically very we've environment. of here I've As that an number well years been type done

We that years, year. few so how seen this haven't obviously a that we'll out plays for see

at to demand of But respect if point, put that then, where how position the with sort a that, you to together, respect like this we take is. to with is guidance and prudent

up the in first So, as we're is half. half, framed, of for but down the point, second the kind demand modeling at back picking significantly in Jaime this year, the

on second getting just better we've the time. obviously, that, probably the based at growth got assumptions frame economy can that So, half way best I

Frank Mitsch

much. so you Thank

Operator

Thank you. for moment question. our One next

next Sison Our from Fargo. with comes question Wells Michael

line Your open. is

Michael Sison

Hey, down. quarter a and like or first was December? your guys. was what big there volume fourth delta And your looks good morning, difference outlook growth quarter, And second the November volume October, for In It was and the volume it then, year-over-year? for what's between declines?

Bob Patterson

Yes.

in sort it was to expected, time. from being at what ended accounts we for up orders, more. we So, recall November that that better when said in which little were on of was view looking change December even our XX% There about announcement we sort bit if be really -- then quarter. was we down back the at our a delivered going the of than fourth versus EPS you

When I flat, similar. that look different actually that is QX about thing if think The I'd is, maybe kind the just down and a how Asia at (ph) pretty more, it's but as the first U.S. quarter, proceeding a little bit Mike, got] Europe little QX. of to [you've is you say only is from

Michael Sison

Got And it. then...

Bob Patterson

flat, by mean, By -- similar... I may clear, you flat be

Michael Sison

then, half things half. meaning Yes. you of implies is Sequential. just the better And else, that there is improvement a besides better could quarter, versus second for other guidance second drive demand? you million really And better gave guess first I volume driven need that better anything half the $XXX EBITDA by second help

Bob Patterson

cost, the have to that I second Well, will start is Yes. in to actions reduce do mean, one taken which I some here in kick quarter. think actually we

a just standpoint, but will of I raw that be material also seen have see remains in out second effect how half. it that first than a So to kind some well. could things from in actually from play benefit half as think the greater the

of year we'll it back half but look I'd additional extent really to some in to normal the this the some regard, year. say with seasonality normal that the level the of see, that have cost you help actions play follows if is how yes, quarters out, But at that

Michael Sison

Thank it. you. Got

Bob Patterson

Yes.

Operator

Thank you.

Harrison Seaport. Our next from Mike question comes with

line is Your open.

Mike Harrison

Good Hi. morning.

Bob Patterson

Hi.

Mike Harrison

an opportunity question of margin Bob, show EBITDA kind price the a curious for that should business. margin the you think cost that target EBITDA composites that kind margins I forma have being get a grow Is plan mid-XX%-s margin? to at slide we EBITDA composites time? if XX% Just Or over of had XXXX. says leverage term? some it's on The pro for you to about operating longer there higher or of business

Bob Patterson

in the it be in negatively particular, by was should impacted our business. costs, including XX%. term, Longer last higher higher Dyneema year, business Europe than energy And

XXXX. in so And impacted that margins

better As or businesses on believe abate little comparable before well. as becomes what 'XX. a historically you same know, energy a above composite Dyneema we and forma costs as our true presented out, of hopefully can balance least basis, flatten But here at really that, be pro in operated for that a bit the I is

Mike Harrison

below free you're is getting continue give to strong Are be your that just Thanks. All attractive? to the times, on you repurchases? would capital for on share way, congratulations by flow leverage on variable right. Are X on M&A there about cash Any focusing you rate thoughts more capital how And can you be Maybe with looking and curious at debt some the helpful. working down? the going getting whether going paid market comment management allocation XXXX? thinking thoughts

Bob Patterson

I we foremost, that to in first important capture the accommodate synergies. to Yes. some we and the mean, make Clariant of some investments have remaining business want and

we're delayed bumping in this additional planning help know, In As that had solve There's there some to we to plan investments things year. some actually effectuate you COVID to composites. some for capacity our this drive those we're we'll make cases, a result of that year. as into and were that growth

in next year, kind times share priorities plus, candidly, for we've we be would in year, sometime looking years. do something below that I fourth the hope that be that priority increasing terms been the every or but And is anything quarter. keeping would X announce XX -- last We'd dividend one. the takes business, that over we We of XX could again or of I number repurchases to view think And operating else. the thereafter, obviously, leverage priority

Mike Harrison

Thank much. right. very All you

Operator

our Stanley. next And you. Thank Morgan comes from question with Angel Castillo

open. Your line is

Angel Castillo

in order it on March? -- kind bit February trends kind seeing I you're of more and question. you give was us my just taking a orders of January, as roughly the developed of what terms for how Thanks color little early for in hoping just Hi. they could

Bob Patterson

about now, I special unique what don't mean with we're what It's seen far. highlight or we've so I right to in think line anything there's projecting.

typical bigger the as a us typically we the though, into other month for is March two quarter. As than head is second

extent baked is analysis actually as well. that into that, some our to So,

really helps on nothing to So, report specifically. January,

Angel Castillo

Got us talked it's guidance you on assumptions savings in restructuring what some are and the materials, raw it. deflation And what give then, is I that you terms quantify also about basically from help are margin conservatism of the whether in or just Could And benefit your or of maybe just us potential baked there. there? front, or just, kind the energy upside throughout and the guess, the quarters? then, the expected assumptions prices of underlying what

Bob Patterson

give million from was about it XX%. were standpoint kind and region, That I'm but up of 'XX costs going okay? an energy view energy you a total actually this, Look of 'XX. varies $XX Yes. in -- global to So, clearly, versus by

out could we probably split XX of in now. segments had the on In Slide we fact, right that that that's deck this

versus and a hopefully that X% last say to that this in now of first year. energy lot is going the region. We second how some Obviously, feeling would compared has better preponderance getting relief skewing right storage provides right through respect then, I total now winter that in are plays with half we'll here for Europe half. up energy costs 'XX where have level some in the And Obviously, that in of to out about see 'XX.

to of respect into then, -- seeing And really there. we as say said that this deflation that prepared some around couldn't And a balancing and are, but that. it, of I I put look raw is to obviously, with kind we're in modeled go my there year. we demand. I remarks, little materials, We've just quantification bit more a as opportunity would uncertainty with

see in and of can how quarter we'll out that the on first on clarity call. months hopefully that So, plays give more some our couple next

Angel Castillo

side? cost on And Got savings it. the then,

Bob Patterson

part that that missed Oh, of I'm sorry latter if thing. I

So, cost things is have if in costs. look there items, we some net inflationary and at If I some cost, inflationary about are just of total there about that's in reductions the I look -- that at as $XX million. reductions

quarter that of starts I to As here to balance said, the and in play the with of through timing the second then respect in year. kind of really those the

Angel Castillo

you. Thank helpful. Very

Bob Patterson

sure. Yes,

Operator

Thank Bank. with you. question comes David Deutsche from our And next Huang

is open. line Your

David Huang

good morning. Hi,

from For 'XX, pricing price be the would prior increase your initiatives? carryover what

Bob Patterson

Yes.

have, half, in it's about front the We I X%. think,

If at you little you sort to look a full than that QX, the lower of bit assumptions. get year if

David Huang

what's Okay. year? your for capital working And this then also, expectation

Bob Patterson

the sales. we capital working level of expectation that a kind of maintain Really, is with commensurate

lot that So, we a look at year. of quarter the we a as don't this through course here as percentage in that did changing percentage generate a meaningfully sales. I really of Obviously, cash see of fourth the XXXX. of

for for 'XX. number I $XXX million Yes. the -- sorry free flow -- is cash think our year

little that. is EBITDA mostly So, on But converted. capital working bit of a it

David Huang

of working I or source capital a 'XX, use would So, guess? of cash be cash in

Joe Di Salvo

year, assume The the for David. basically on model we capital full is working flat

really... So,

David Huang

Thanks. Okay.

Operator

for our moment One next question.

Kristen from Owen We have a Oppenheimer. question from

Your line is open.

Kristen Owen

morning, Good everyone. you. Thank

quarter in Color. year strong really cost the and in performance fourth particular, price in So, all

questions in equation lot two And XXXX. playbook? working What's in the of the we've the about that. side Just talked a pricing around cost

think some Given the we the moving and XXXX? cost of parts, how about spread moving throughout should price between

Bob Patterson

as Yes. get the remind I -- question answered address half I second first. of if the me I your guess the don't

beginning 'XX. end we the that of and businesses. I the getting often just of really So, and routinely going price. think was board back that regions And went XXXX, I did all of think really things was And all in the we're early well to we that the one across

particular prices quarter. any a raised where wasn't there moment in in just So, time really we

time. I think we just did that steadily over

of I kind quarter down in peaked in result. our we obviously, with raw In prior you're supply and as said a dynamics, the now and think, demand seeing third quarter, deflation that, changes material remarks, coming really

'XX. that kind did to puts that we in results I So into to time what just things perspective us the over helped think, deliver did that of, with respect we

that. but something even So, it 'XX, in just wasn't things necessarily before that started

I in We're a better small, model positive think, have now. do that a conservative model raw as could I have look, being in do And, material better we if in standpoint mix that today. we said, what the We than from number be regard. price right that 'XX,

Kristen Owen

just your You of touched back the the to spread year. But, maintain of then what's capability my capability follow-up the that deflationary is I this how question, of moving in environment, what perspective, pieces, just you guess, in but ask view pricing environment? going which type the own the obviously, on sort throughout cost degree if from is you're I of could can, manage to pricing a half your you ability that

Bob Patterson

is look, demand to at an is Yes. I most -- to well, that that's also mix customers formulations historically, do. where mix price visited we with lower on maybe option when have in sometimes a We've that that for needed think a prudent mean, anyway. see them cost but the price. change which or pressure as And our felt was I have down, if made you can look lower better alternatives to I we like it's accommodations when think or

a regard. very end that's can paint the broad application. It's say I market see to at It standpoint. terms of So, I from of hard very does of done we've greatly around think deflation prices look, than probably generalization but in historically, deflationary lowering really well maintaining pace thing slower by periods kind sweeping what and best a we in and/or in that a it,

Kristen Owen

helpful. Thank so you much. very That's

Operator

with Our Laurence next Alexander question comes from Jefferies.

is open. line Your

Laurence Alexander

I questions. two have Good morning.

is likely Just get target, there? us the available you you what do on kind give a your or further of can current of in do think of can XX% need shift think Or scale a you path? longer-term most kind sense First, mix? you portfolio

And content, potential EU with the products would you products chemicals? your secondly, to intermediate of to, much particularly on challenged respect what degree meet how terms contamination example, screened for for to from in have PFAS of ban just PFAS, be that your

Bob Patterson

demand Distribution in declined target that what down, we for in pretty were perspective if in to and course, the forma things to business added One the to year. looks modeling into has of half 'XX as come second with with of initial the XX%. that you Dyneema like of close the back had went That XXXX out, actually is pro XX% the put EBITDA we

I So, reasonably has go that recent the actually and see of you half way back think there. about time in actually can us something

that I So, have they Obviously, of now I characteristic. growth get sustainable we helps can side terms corporate that something really to businesses the in composites of in a else and the that, is is these the higher we managing improving important which and fastest-growing think believe all company XX% obviously mix and as being whole. that costs that equation are too. an But everything part for solutions, that margins, have

any our regulatory And as of number We then, I viewed specifically risk reviewed sort a Europe. other I of PFAS minimal minimal. review one we've and of things quarter, mean, don't changes significant been a I kind. view we every that think as we exposure of that as categorized as and in that well that's that as the

Laurence Alexander

you. Thank

Bob Patterson

Yes.

Operator

you. Thank

Citi. from question next comes from Eric Our Petrie

open. is line Your

Eric Petrie

Hi. Bob. Good morning,

Bob Patterson

Good morning.

Eric Petrie

was basis? that can of you much underlying How about then, year-over-year. XX% talk grew an drivers how kind Dyneema? roughly they main increased And sales the attributed to solutions and segment on of sustainable Your

Bob Patterson

Yes.

protection, we for maybe for of human infrastructure. if the about Dyneema, at and look have, is you the half XX% is recall then to XX% in most health part, safety that personal sustainable So, business that

applications capturing in not portfolio, of So such are consumer there. as largely, the of be may and products we're that that in sustainability some part the consumer

reflects which of about And a through And direct half then, for from was that it as destocking. the decline things 'XX, I even in and year read you much demand basis. think X.X% over through consumers so packaging, the pull what as if didn't I were is beverage food look at second like constant 'XX dollar sustainable a on just solutions the up really, in

interest in So, taking not I of a particular of, was just that place the those lack think, reduction inventory the applications, but time. at level overall

Eric Petrie

half? utilization update Helpful. masterbatch give operations, the terms you can just in of On for first you're an particularly what in quarter and us expecting how Europe fared in the

Bob Patterson

that give say did or timeframe you fourth you Could me quarter?

Eric Petrie

Yes.

operating the then rates? you're first from declined During masterbatch what how half utilization expecting quarter, and for

Bob Patterson

Yes. don't rates. we I utilization cite mean, typically, look,

a reasons were have for turnover small myriad the is a our they're that see small. often relatively you'd that got batch that applications, of if visit lines to of of niche facilities, that largely One look, fair We've which all processing for actually Color amount you time.

so you as in that was quarter, it Obviously, So, assume nameplate don't with really being more in that a look respect. capacity it can down much as demand much per I fourth capacity at as the we had result.

along part I been in right what had some to modeling of That's capacity we opportunity news are from all Clariant expect with the until not now, in That's second respect see of benefit Those of some don't for Europe. but year. to do those think that the really to the process cost is there synergies. just reduction anybody. half

Eric Petrie

you. Thank

Bob Patterson

Yes.

Operator

Anderson Thank from you. a Stifel. And Vincent we question from have

Your open. is line

Vincent Anderson

morning. good Yes,

in helping the what just Can in outlook memory the you you derisk patterns order strong of and for your demand XQ on gate. mentioned you So, that might protection XXXX Dyneema as business, our far refresh out personal you saw there? be so

Bob Patterson

our Yes. a -- to there's that necessarily don't probably word, seasonal is element not but don't protection, know demand if it's personal of right that quarters, I mean, across the sort agnostic, think historically for I applies really of what have you And businesses to think that. look, a do some pattern I seasonal I the them. we've to will, that, seen

making that, in for applications, there defense I we been countries particularly levels in that higher of up level that and stepping their the think, have war do I are military. see quarter. trends many example, gear, that think protection to investment the to in respect really personal fourth they're the resulting in just And Ukraine, are starting of are own with

through see have got some discussing the didn't. in to we a has think might maybe upside that there started fact, of we that, happen was started In and potential were for course to bit 'XX. the us But QX, as potential that, earlier. It Dyneema I of year, little that

Vincent Anderson

specifically what care and I to all parts exposed to care back that back defensive elective would power? mentioned more exposure while be you That's the step can a know health But your Understood. Clariant, through you helpful. as as what more more then, health COVID-related Thank break spending down you household and would going And demand, care bit you. exposure, year. between integrating view your a potential portfolio of maybe between this headwind

Bob Patterson

actually break packaging, as and applications are versus But well for by the part, couldn't you some it's us and down minimally things evasive medical devices, elective catheters non-elective. hard portfolio as I pharma-related drug is And with we in like care. for to the devices, delivery really, to that, right, pharma actually for Yes. which even where go. health respect most determine

So, a amount do discretionary is fair I think that that that, to of spending. there is exposed

procedures, just of type also necessarily -- almost care, willing are related care money to people but personal amount not spend elective the to on health that items. So,

now, I'm we've the it's that a did 'XX. when it as XXXX kind actually go challenge built possible model. don't I I it anywhere. looks for That's viewing into potential flat right didn't challenge of just think So, what 'XX. for But people out like a in think

Vincent Anderson

Understood. Okay. Thank you.

Bob Patterson

quarter. forward this next Take and appreciate Okay. look call everyone's morning, That last question. time to you. you our attention on We Thank everyone. first care, our and was our following updating

Operator

for you call. This participating. Thank today's conference concludes

disconnect. may now You

Avient (AVNT) 15 Feb 232022 Q4 Earnings call transcript