Avient (AVNT) - 2024 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents Avient Corporation's unaudited condensed consolidated financial statements, MD&A, market risk, and controls ITEM 1. FINANCIAL STATEMENTS This section presents Avient Corporation's unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2024 Condensed Consolidated Statements of Income (Unaudited) Avient Corporation reported significant improvements in net income, EPS, sales, gross margin, and operating income for the periods ended June 30, 2024 Condensed Consolidated Statements of Income (Unaudited) | Metric (in millions, except per share) | 3 Months Ended Jun 30, 2024 | 3 Months Ended Jun 30, 2023 | Change ($ millions) | Change (%) | 6 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2023 | Change ($ millions) | Change (%) | | :------------------------------------- | :-------------------------- | :-------------------------- | :------------------ | :--------- | :-------------------------- | :-------------------------- | :------------------ | :--------- | | Sales | $849.7 | $824.4 | $25.3 | 3.1% | $1,678.7 | $1,670.1 | $8.6 | 0.5% | | Gross margin | $257.6 | $240.7 | $16.9 | 7.0% | $535.8 | $488.3 | $47.5 | 9.7% | | Operating income | $72.5 | $62.3 | $10.2 | 16.4% | $166.5 | $119.4 | $47.1 | 39.4% | | Net income attributable to Avient common shareholders | $33.6 | $22.1 | $11.5 | 52.0% | $83.0 | $42.0 | $41.0 | 97.6% | | Basic EPS (Continuing Operations) | $0.37 | $0.24 | | | $0.91 | $0.47 | | | | Diluted EPS (Continuing Operations) | $0.36 | $0.24 | | | $0.90 | $0.47 | | | | Cash dividends declared per share | $0.2575 | $0.2475 | | | $0.5150 | $0.4950 | | | Condensed Consolidated Statements of Comprehensive Income (Unaudited) Total comprehensive income attributable to Avient common shareholders increased for the three months but slightly decreased for the six months ended June 30, 2024 Condensed Consolidated Statements of Comprehensive Income (Unaudited) | Metric (in millions) | 3 Months Ended Jun 30, 2024 | 3 Months Ended Jun 30, 2023 | 6 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2023 | | :------------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $33.8 | $22.3 | $83.5 | $42.7 | | Translation adjustments and related hedging instruments | $(18.5) | $(16.3) | $(44.4) | $1.3 | | Total comprehensive income attributable to Avient common shareholders | $15.1 | $4.2 | $38.6 | $40.2 | Condensed Consolidated Balance Sheets (Unaudited) Avient's total assets slightly decreased as of June 30, 2024, while current liabilities significantly increased due to debt reclassification Condensed Consolidated Balance Sheets (Unaudited) | Metric (in millions) | As of June 30, 2024 | As of December 31, 2023 | Change ($ millions) | Change (%) | | :----------------------------------------- | :------------------ | :---------------------- | :------------------ | :--------- | | Total assets | $5,907.8 | $5,968.5 | $(60.7) | (1.0)% | | Cash and cash equivalents | $489.4 | $545.8 | $(56.4) | (10.3)% | | Accounts receivable, net | $486.6 | $399.9 | $86.7 | 21.7% | | Inventories, net | $365.9 | $347.0 | $18.9 | 5.4% | | Goodwill | $1,685.1 | $1,719.3 | $(34.2) | (2.0)% | | Intangible assets, net | $1,515.7 | $1,590.8 | $(75.1) | (4.7)% | | Total current liabilities | $1,498.2 | $773.6 | $724.6 | 93.7% | | Short-term and current portion of long-term debt | $657.7 | $9.5 | $648.2 | 6823.2% | | Long-term debt | $1,420.8 | $2,070.5 | $(649.7) | (31.4)% | | Total equity | $2,334.2 | $2,338.0 | $(3.8) | (0.2)% | Condensed Consolidated Statements of Cash Flows (Unaudited) Net cash provided by operating activities significantly increased for the six months ended June 30, 2024, while investing and financing activities used cash Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric (in millions) | 6 Months Ended Jun 30, 2024 | 6 Months Ended Jun 30, 2023 | Change ($ millions) | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | :------------------ | | Net cash provided (used) by operating activities | $63.1 | $(24.7) | $87.8 | | Net cash used by investing activities | $(54.5) | $(38.6) | $(15.9) | | Net cash used by financing activities | $(54.8) | $(48.3) | $(6.5) | | Decrease in cash and cash equivalents | $(56.4) | $(112.4) | $56.0 | | Cash and cash equivalents at end of period | $489.4 | $528.7 | $(39.3) | Consolidated Statements of Shareholders' Equity (Unaudited) Avient's total equity remained stable from December 31, 2023, to June 30, 2024, with net income offset by other comprehensive loss and dividends - Net income for the six months ended June 30, 2024, was $83.0 million attributable to Avient common shareholders, contributing to equity[14] - Other comprehensive loss, primarily due to translation adjustments, negatively impacted equity by $44.4 million for the six months ended June 30, 2024[6][14] - Cash dividends declared were $0.2575 per share for each quarter in 2024, totaling $47.0 million for the six months[5][11][14] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations for the financial statements, covering accounting policies, estimates, and specific line items Note 1 — BASIS OF PRESENTATION Interim financial statements are prepared in conformity with GAAP and include management's estimates and assumptions - Interim financial statements are prepared in conformity with GAAP and include management's estimates and assumptions[18] - Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of future results[18] Note 2 — GOODWILL AND INTANGIBLE ASSETS Goodwill and intangible assets decreased primarily due to currency translation impacts for the six months ended June 30, 2024 Goodwill and Intangible Assets (in millions) | Asset (in millions) | As of June 30, 2024 | As of December 3