• Organic Revenue Growth: Increased by 4% for the full year 2024.
• CAI Segment Organic Sales Growth: 3% for color, additives, and inks.
• SEM Segment Organic Sales Growth: 6% for specialty engineered materials.
• Adjusted EBITDA Margin Expansion: 90 basis points for CAI and 110 basis points for SEM.
• Total Company Adjusted EBITDA Margin: Expanded 20 basis points to 16.2%.
• Adjusted EPS Growth: 13% for the year, including FX impact.
• Dividend Increase: 5% increase, marking the 14th consecutive year of growth.
• Fourth Quarter Organic Sales Growth: 5% year-over-year.
• Fourth Quarter Adjusted EBITDA Impact: $10 million negative impact due to variable compensation accruals.
• Fourth Quarter Adjusted EPS Impact: $0.08 negative impact due to variable compensation accruals.
• Full Year Adjusted EBITDA Growth: 6% excluding FX, totaling $526 million.
• Full Year Adjusted EPS: $2.66, representing 15% growth excluding FX.
• 2025 First Quarter Adjusted EPS Guidance: Projected at $0.76, including a $0.04 FX headwind.
• 2025 Full Year Adjusted EBITDA Guidance: $540 million to $570 million.
• 2025 Full Year Adjusted EPS Guidance: $2.70 to $2.94, with midpoint representing 11% growth excluding FX.

• Warning! GuruFocus has detected 3 Warning Sign with AVNT.

Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Avient Corp (NYSE:AVNT) achieved organic revenue growth in every region, including challenging markets like EMEA.
• The company reported a 4% increase in organic sales for 2024, with both business segments expanding adjusted EBITDA margins.
• Avient Corp (NYSE:AVNT) introduced a breakthrough innovation in its Dyneema portfolio, offering significant advancements in ballistic protection.
• The company achieved a record year for safety, with the best injury incident rate in its history.
• Avient Corp (NYSE:AVNT) increased its dividend by 5%, marking the 14th consecutive year of annual dividend growth.

Negative Points

• The decision to cease the implementation of the S/4 Hana ERP system resulted in a non-cash impairment charge of approximately $71 million.
• The rapid strengthening of the U.S. dollar negatively impacted EBITDA by $2 million and EPS by $0.01 in the fourth quarter.
• Variable compensation accruals negatively affected fourth-quarter adjusted EBITDA and EPS by $10 million and $0.08, respectively.
• The company faces a $0.12 EPS headwind for 2025 due to foreign exchange impacts.
• Avient Corp (NYSE:AVNT) anticipates a challenging comparison for defense sales in 2025 due to a strong first quarter in 2024.

Q & A Highlights

Q: Can you discuss the impact of the new Dyneema product on defense sales and expectations for 2025? A: Ashish Khandpur, CEO, highlighted that the Dyneema innovation is driven by market needs, offering significant performance upgrades for military and law enforcement. This innovation is expected to maintain or increase margins and create a competitive moat. Although specific revenue numbers weren't disclosed, the product is well-received and being commercialized robustly. Defense sales in Q1 last year were unusually high, creating a challenging comparison for 2025, but the company is working to overcome this hurdle.

Q: What led to the decision to halt the SAP S/4 Hana ERP implementation, and what are the alternatives? A: Ashish Khandpur explained that the decision was due to increased costs, complexity, and resource requirements, which exceeded initial expectations. The company realized that alternative solutions, leveraging new applications in machine learning and AI, could deliver similar benefits at a lower cost and faster implementation. This strategic shift aims to achieve desired outcomes in pricing, inventory management, and supply chain visibility more efficiently.

Q: How did healthcare contribute to growth in Q4, and what are the expectations for 2025? A: Healthcare was a strong focus, delivering double-digit growth in 2024 and Q4. Growth was driven by restocking in the U.S., new business in continuous glucose monitoring devices, and drug delivery devices in Asia. The company expects continued growth in healthcare, supported by new business wins and core applications in medical devices.

Q: What are the volume assumptions in the 2025 guidance, and how much growth is expected from new products? A: The guidance assumes GDP-like growth with an additional 100-200 basis points from volume and mix, driven by innovation. The company aims for GDP plus growth through new product introductions and strategic initiatives, with innovation playing a significant role in achieving these targets.

Q: How does the potential increase in U.S. manufacturing impact Avient, considering FX headwinds? A: Ashish Khandpur noted that increased U.S. manufacturing could be positive, reducing FX exposure and allowing faster customer service. The company is less affected by tariffs and raw material exposure, and a shift towards U.S. manufacturing aligns with Avient's strategic flexibility in supply chains.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.