Disclaimer Forward-looking statements Certain statements contained in or incorporated by reference into this presentation constitute "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 business risks and uncertainties, any of which could cause actual results to differ mate ...

Core Viewpoint - Avient Corporation reported its fourth-quarter and full-year results for 2025, highlighting a 6% increase in adjusted EPS and a positive outlook for 2026 with projected earnings growth despite mixed demand conditions. Financial Performance - Full-year 2025 adjusted EPS was $2.82, a 6% increase from the previous year, driven by an adjusted EBITDA margin expansion of 50 basis points to 16.7% and lower interest expenses [1] - Fourth-quarter adjusted EPS was $0.56, reflecting a 14% growth year-over-year, primarily due to organic sales growth in the Specialty Engineered Materials segment and productivity initiatives [1] - Full-year sales for 2025 increased by 1% to $3,260 million, with fourth-quarter sales rising 2% to $761 million; foreign exchange positively impacted sales by 3% in Q4 and 1% for the full year [1] Debt Management and Cash Flow - The company generated strong operating cash flow of $302 million in 2025, which supported a debt repayment of $150 million during the year [1] - Avient expects to deliver free cash flow exceeding $200 million in 2026, enhancing its flexibility for future cash deployment [1] 2026 Financial Guidance - For 2026, Avient projects adjusted EPS to range from $2.93 to $3.17, indicating a growth of 4% to 12% over 2025 [1] - The company anticipates adjusted EBITDA for 2026 to be between $555 million and $585 million, representing a growth of 2% to 7% [1] Strategic Focus - The management emphasized a commitment to driving profitable mix and productivity, which contributed to the adjusted EBITDA margin expansion and overall financial performance [1] - Continued investments in prioritized growth areas and a robust innovation pipeline are part of the strategy to maintain earnings and margin growth into 2026 [1]

Sales Performance - Fourth quarter sales increased by 2% to $761 million, while full-year sales rose by 1% to $3,260 million, with foreign exchange contributing a favorable impact of 3% in Q4 and 1% for the full year [4]. - Sales for Q4 2025 reached $760.6 million, a slight increase from $746.5 million in Q4 2024, while total sales for the year were $3,260.2 million compared to $3,240.4 million in 2024, reflecting a year-over-year growth of 0.6% [24]. - Total sales for Q4 2025 reached $760.6 million, a 1.9% increase from $746.5 million in Q4 2024 [33]. Earnings and EPS - Full-year 2025 GAAP EPS was $0.89, down from $1.84 in the prior year, while adjusted EPS increased by 6% to $2.82 compared to $2.66 in 2024 [3][4]. - Fourth quarter adjusted EPS of $0.56 represents a 14% growth year-over-year, driven by organic sales growth in the Specialty Engineered Materials segment [4]. - Earnings per share (EPS) for Q4 2025 was $0.18, down from $0.53 in Q4 2024, with diluted EPS for the year at $0.89 compared to $1.84 in 2024, reflecting a decline of 51.6% [24]. - The first quarter adjusted EPS is projected to be $0.81, reflecting a 7% increase compared to the prior year quarter [8]. - For 2026, adjusted EPS is projected to range from $2.93 to $3.17, indicating a growth of 4% to 12% over 2025 [4][8]. Cash Flow and Capital Expenditures - The company generated strong operating cash flow of $302 million for the full year 2025, which supported debt repayment of $150 million [4]. - Net cash provided by operating activities for the year was $301.6 million, compared to $256.8 million in 2024, reflecting an increase of 17.4% [30]. - Capital expenditures for 2025 were $106.6 million, down from $121.9 million in 2024, indicating a reduction of 12.5% [30]. - The company expects to deliver free cash flow exceeding $200 million in 2026, providing greater flexibility for future cash deployment [8]. Profitability Metrics - Adjusted EBITDA margin expanded by 50 basis points to 16.7% for the full year 2025, supported by productivity initiatives [4][6]. - The full-year adjusted EBITDA is expected to be between $555 million and $585 million, representing a growth of 2% to 7% [8]. - Adjusted gross margin as a percentage of sales improved to 32.3% in Q4 2025, compared to 31.6% in Q4 2024 [35]. - Adjusted operating income for Q4 2025 was $73.0 million, up from $65.2 million in Q4 2024, representing a 2.3% increase in operating margin [35]. - Adjusted EBITDA for the year ended 2025 was $544.6 million, compared to $526.4 million in 2024, indicating a 3.9% year-over-year growth [35]. Income and Expenses - Net income attributable to Avient common shareholders for Q4 2025 was $16.9 million, significantly lower than $48.3 million in Q4 2024, with annual net income at $81.9 million compared to $169.5 million in 2024, a decrease of 51.7% [24]. - Operating income for the year ended 2025 was $203.5 million, down from $329.3 million in 2024 [33]. - Selling and administrative expenses increased to $190.0 million in Q4 2025 from $173.9 million in Q4 2024 [33]. - The company reported a net loss attributable to common shareholders of $20.2 million for Q1 2025, with an adjusted net income of $70.0 million [35]. Special Items and Restructuring - The company reported special items impacting net income, with a total impact of $(19.3) million for Q4 2025, compared to $18.0 million in Q4 2024, highlighting the financial restructuring efforts [26]. - Special items before tax for Q4 2025 amounted to $24.3 million, compared to a negative $23.9 million in Q4 2024 [35]. Asset and Liability Overview - Total assets as of December 31, 2025, were $6,025.6 million, up from $5,811.1 million in 2024, representing an increase of 3.7% [28]. - Total liabilities increased to $3,639.3 million in 2025 from $3,481.5 million in 2024, indicating a rise of 4.5% [28].

Group 1 - The article does not provide any relevant content regarding the company or industry [1]

Summary of the Conference Call Transcript Industry Overview - The report focuses on the **Chinese Chemical Distribution Industry** and highlights a **lull in demand** ahead of the **Lunar New Year**. - **January sales** for chemicals increased by approximately **3% year-over-year**, with chemicals outperforming paints. [1][19] - New orders for chemicals are modestly higher, while orders for paints remain flat, indicating a greater **inventory risk** in the paints sector. [1][19] Key Insights - **Cyclical confidence** has softened, suggesting that sales acceleration has likely bottomed out before the Lunar New Year. [1][19] - Manufacturing sectors, particularly **electronics and appliances**, are noted as a bright spot in the current market. [1][19] - The survey covered regional distributors in major cities such as **Shanghai, Wuxi, Changzhou, Nanjing, Linyi, and Qingdao**, representing a population of around **70 million** and targeting industrial activity in provinces with approximately **550 million** people. [19] Sales and Inventory Trends - Sales expectations are muted, with **Nanjing** showing the strongest trend and **Changzhou & Wuxi** exhibiting the weakest. [19] - The **order-to-inventory ratio** is lower, indicating that inventories are outpacing orders, which could lead to potential overstock issues. [4][10] - The **sales acceleration** for the upcoming month is expected to be muted, reflecting a cautious outlook among distributors. [4][10] Market Outlook - The overall market outlook for **hardware & tools** and **electronics & appliances** is flat, with over **50%** of respondents indicating stronger demand expected next month. [4][21] - The **paint end-market outlook** shows a decline in growth compared to previous surveys, with various sectors such as construction and electronics reporting weaker performance. [25] Company-Specific Insights - Companies with significant Asian footprints include **Albemarle (ALB)**, **Air Products (APD)**, and **3M (MMM)**, among others, with varying percentages of sales derived from the region. [6] - The report includes a list of companies rated by Jefferies, with recommendations ranging from **Buy** to **Hold** based on their performance and market conditions. [47][50] Conclusion - The Chinese chemical distribution market is currently experiencing a slowdown in demand, particularly in the paints sector, while manufacturing in electronics shows some resilience. - The cautious outlook and muted sales expectations suggest potential risks for companies heavily reliant on this market, necessitating close monitoring of inventory levels and order trends. [1][19][25]

Core Viewpoint - The analysis compares Avient (AVNT) and Air Products and Chemicals (APD) to determine which stock represents a better value opportunity for investors interested in the Chemical - Diversified sector [1]. Group 1: Zacks Rank and Earnings Estimates - Avient currently holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Air Products and Chemicals has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings outlook [3]. - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, which positions AVNT as having a more favorable earnings outlook compared to APD [3]. Group 2: Valuation Metrics - Avient has a forward P/E ratio of 12.40, significantly lower than Air Products and Chemicals' forward P/E of 20.37, indicating that AVNT may be undervalued relative to APD [5]. - The PEG ratio for Avient is 1.25, while for Air Products and Chemicals, it is 2.60, suggesting that AVNT is expected to grow earnings at a more favorable rate relative to its price [5]. - Avient's P/B ratio stands at 1.44, compared to APD's P/B of 3.39, further indicating that AVNT is trading at a lower valuation relative to its book value [6]. - Based on these valuation metrics, Avient holds a Value grade of A, while Air Products and Chemicals has a Value grade of C, reinforcing the view that AVNT is the better investment option at this time [6].

Core Insights - The article emphasizes the importance of value investing and highlights Avient (AVNT) as a strong candidate for value investors due to its favorable valuation metrics [2][8]. Valuation Metrics - Avient (AVNT) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4]. - The stock's P/E ratio is 11.51, significantly lower than the industry average of 21.71, suggesting it may be undervalued [4]. - AVNT's PEG ratio stands at 1.12, compared to the industry's average of 2.32, indicating a favorable growth outlook relative to its valuation [5]. - The P/B ratio for AVNT is 1.36, which is attractive compared to the industry average of 1.55, further supporting the notion of undervaluation [6]. - The P/CF ratio for AVNT is 10.71, well below the industry's average of 25.16, highlighting its strong cash flow position [7]. Investment Outlook - The combination of these metrics suggests that Avient is likely undervalued and stands out as one of the strongest value stocks in the market, particularly given its positive earnings outlook [8].

Core Insights - The SCCM Small Cap Value Equity Strategy reported a strong performance in Q3 2025, with a gross return of 14.4% and a net return of 14.2%, outperforming the Russell 2000 and Russell 2000 Value indices which returned 12.4% and 12.6% respectively [1] - The positive performance was attributed to Fed rate cuts, economic resilience, and increased investor risk appetite [1] Company Analysis: Avient Corporation (NYSE:AVNT) - Avient Corporation is a global provider of specialized polymer materials, colorants, composites, and additives, serving key markets such as packaging, healthcare, defense, and industrial manufacturing [3] - The company has transitioned from a commodity materials business to a higher-margin specialty formulator through strategic acquisitions and divestitures, focusing on sustainability and advanced material innovation [3] - Avient's execution is supported by cost discipline, productivity initiatives, and an increasing mix of recurring and value-added revenue streams [3] - The company benefits from exposure to resilient sectors like healthcare and defense, providing stability, while also seeing cyclical upside from demand recovery in packaging and industrial applications [3] - Management is focused on mix improvement, margin expansion, and deleveraging through operational excellence and targeted capital allocation [3] - Avient is investing in next-generation materials aligned with long-term trends in electrification, lightweighting, and circular manufacturing [3] - With a stronger balance sheet, expanding free cash flow, and a structurally improved earnings profile, Avient is positioned to compound value and outperform traditional chemical peers in the upcoming cycle [3] Stock Performance - Avient Corporation's stock had a one-month return of 10.15% but experienced a significant decline of 44.21% over the last 52 weeks [2] - As of November 24, 2025, Avient's stock closed at $29.29 per share, with a market capitalization of $2.682 billion [2]

Core Insights - The article promotes a live video series called the Underdog Daily Dividend Show, which features potential portfolio candidates for investors [1] - The show is hosted by Fredrik Arnold and takes place around 10 AM on every NYSE trading day [1] - The article encourages audience engagement by inviting comments on favorite or curious stock tickers for future reports [1] Company and Industry Summary - The Dividend Dogcatcher is a platform that provides information on dividend stocks and investment opportunities [1] - The focus is on identifying underperforming stocks that may offer sustainable dividends, appealing to income-focused investors [1] - The initiative aims to create a community around dividend investing, enhancing interaction and information sharing among investors [1]

Sales Performance - Sales decreased by $8.7 million, or 1.1%, in Q3 2025 compared to Q3 2024, with a 2.9% decline excluding foreign exchange impacts[71] - For the nine months ended September 30, 2025, sales increased by $5.7 million, or 0.2%, with a 0.2% decline excluding foreign exchange impacts[72] - Sales in the Color, Additives and Inks segment decreased by $11.6 million, or 2.2%, in Q3 2025, while the Specialty Engineered Materials segment saw an increase of $3.1 million, or 1.1%[84][88] Gross Margin and Operating Income - Gross margin as a percentage of sales was 30.4% for Q3 2025, down from 32.1% in Q3 2024, primarily due to higher environmental remediation and restructuring charges[73] - Operating income decreased by $10.1 million, or 13.1%, in Q3 2025 compared to Q3 2024, and decreased by $79.8 million, or 32.7%, for the nine months[83] - Operating income for the Specialty Engineered Materials segment decreased by $8.0 million for the nine months ended September 30, 2025, due to higher operating costs[90] Expenses - Selling and administrative expenses decreased by $6.4 million in Q3 2025 but increased by $68.6 million for the nine months, mainly due to an impairment charge related to the S/4HANA project[76] - Corporate costs increased by $9.3 million in Q3 2025, primarily due to higher environmental remediation and restructuring charges[91] - Corporate costs increased by $78.1 million for the nine months ended September 30, 2025, primarily due to a $71.6 million impairment charge related to the cessation of the S/4HANA development[92] Cash Flow and Liquidity - Net cash provided by operating activities decreased by $0.4 million during the nine months ended September 30, 2025, compared to the same period in 2024, mainly due to higher incentive compensation payments and increased working capital[97] - Net cash used by investing activities was $64.2 million for the nine months ended September 30, 2025, compared to $79.5 million in 2024, reflecting capital expenditures[98] - Net cash used by financing activities was $181.7 million for the nine months ended September 30, 2025, primarily due to $100.2 million in long-term borrowings payments and $74.1 million in dividends paid[98] - As of September 30, 2025, total liquidity was $932.9 million, consisting of $445.6 million in cash and cash equivalents and $487.3 million in revolving credit availability[94] - Approximately 76% of the company's cash and cash equivalents were held outside the United States as of September 30, 2025[94] Debt and Financing - The company made voluntary prepayments of $100.0 million on its senior secured term loan during the nine months ended September 30, 2025[102] - The company refinanced its senior secured term loan on March 12, 2025, reducing the interest rate by 25 basis points[101] - Aggregate maturities of the principal amount of debt total $1,999.1 million, with $621.1 million due in 2029 and $1,376.5 million due thereafter[101] - The company expects to meet cash requirements for the remainder of 2025 through cash on hand, cash from operations, and available liquidity under its revolving credit facility[95] Interest and Tax - Interest expense, net decreased by $2.7 million in Q3 2025, driven by reduced interest rates and $100 million in prepayments on the senior secured term loan[77] - The effective tax rate for Q3 2025 was 23.5%, up from 22.5% in Q3 2024, influenced by jurisdictional earnings mix[78]