Avient Corporation — FY 2021 Form 10-K
Reporting period: Year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; the supplied filing text does not provide clear Q4-only financial results.
Business context
Avient formulates specialty and sustainable polymer materials, color and additive systems, advanced composites, inks, and distributes polymer resins. It operates three segments: Color, Additives and Inks; Specialty Engineered Materials; and Distribution. Sales were $4.8 billion, with approximately 53% generated outside the United States. The 2021 comparison is materially affected by the Clariant Color business, acquired July 1, 2020.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Sales | $4,818.8 million | $3,242.1 million |
| Gross margin | $1,099.6 million; 22.8% of sales | $784.3 million; 24.2% of sales |
| Operating income | $381.2 million; 7.9% of sales | $189.3 million; 5.8% of sales |
| Continuing-operations net income | $230.6 million | $133.8 million |
| Diluted EPS from continuing operations | $2.51 | $1.46 |
| Cash from operating activities | $233.8 million | $221.6 million |
| Capital expenditures | $100.6 million | $63.7 million |
| Cash and cash equivalents at year-end | $601.2 million | $649.5 million |
| Total debt, carrying value | $1,858.9 million | $1,872.6 million |
Revenue increased 48.6%, primarily reflecting the Clariant acquisition, customer and end-market growth, and price increases related to raw-material inflation. Cost of sales rose faster than revenue, lifting from 75.8% to 77.2% of sales and reducing gross margin percentage. Operating income more than doubled. The effective tax rate was 24.3%, compared with 3.7% in 2020, when tax benefits included a capital-loss carryback and other favorable items.
Working-capital investment to support growth partly offset higher earnings: receivables and inventory increased. Year-end liquidity was $1,086.7 million, comprising $601.2 million cash and $485.5 million of revolver availability. Approximately 71% of cash was held outside the United States. No revolver borrowings were outstanding, and the company reported compliance with debt covenants. The $500 million revolving facility matures in 2026; senior notes of $600 million mature in 2023 and $650 million in 2025.
Cash dividends paid were $77.7 million; declared dividends were $0.875 per share. The company repurchased 0.1 million shares during 2021 for approximately $4.2 million.
Segments and material changes
- Color, Additives and Inks: Sales rose 59.8% to $2,401.6 million and operating income rose 67.6% to $303.1 million. On a pro forma basis including Clariant in both periods, sales increased 18.0% and operating income 34.0%.
- Specialty Engineered Materials: Sales increased 29.6% to $918.9 million; operating income increased 39.8% to $132.0 million, supported by demand for advanced composites and higher-margin solutions.
- Distribution: Sales increased 46.9% to $1,630.9 million; operating income increased 34.1% to $93.2 million. Higher selling prices and demand supported growth, partly offset by raw-material inflation.
Avient acquired Magna Colours, a sustainable water-based inks business, on July 1, 2021 for $47.6 million. Research and development expense increased to $83.2 million from $59.8 million. Restructuring and employee-separation charges were $14.7 million, versus $19.6 million in 2020.
Outlook, risks and contingencies
Management expects approximately $135 million of capital expenditures in 2022, primarily for growth, recent acquisitions, and strategic investment. Its stated priorities are sales growth with expanding margins, offsetting raw-material and logistics inflation, and continued investment in product development, operational excellence, and sustainability. The filing does not provide numerical revenue or earnings guidance.
Management cited raw-material cost and availability, logistics constraints, inflation, foreign-exchange movements, end-market demand, plastics regulation, competition, and continuing COVID-19 uncertainty as risks. Some supply disruptions, shortages, allocations, and delays occurred in 2021, but management said they did not materially affect the business. The company had $124.5 million accrued for environmental liabilities, including $113.2 million for the former Calvert City site; additional costs are possible but not currently estimable. The Clariant-related restructuring plan is expected to continue through 2023, with approximately $75 million of total charges anticipated.
Other notable items: 2021 included a $9.4 million pension and post-retirement mark-to-market loss, versus a $17.2 million gain in 2020. Goodwill was $1,286.4 million; the annual impairment test identified no reporting units at risk. Management and the auditor concluded internal control over financial reporting was effective, and the financial statements received an unqualified audit opinion.
Key facts for investors to verify
- Separate acquisition-driven growth from underlying growth; compare 2021 with pro forma periods that include Clariant.
- Track whether pricing and productivity can offset raw-material, energy, and logistics inflation without further margin erosion.
- Review working-capital conversion and cash generation as receivables and inventories expand.
- Assess debt maturities, refinancing needs, and the company’s ability to sustain dividends and planned capital spending.
- Monitor environmental remediation estimates, particularly the Calvert City reserve, and the cost and timing of the restructuring plan.