https://www.avient.com/sites/default/files/2022-04/Avient Acquisition of Dyneema and Q1 2022 Results_0.pdf
Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: • The time required to consummate the acquisition of the Dyneema business, the satisfaction or waiver of conditions in the purchase agreement, the ability to obtain required regulatory or other third-party approvals and consents and otherwise consummate the proposed acquisition of the Dyneema business; • Our ability to achieve the strategic and other objectives relating to the proposed acquisition of the Dyneema business and possible sale of the Distribution business; • Disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future; • The effect on foreign operations of currency fluctuations, tariffs and other political, economic and regulatory risks; • The current and potential future impact of the COVID-19 pandemic on our business, results of operations, financial position or cash flows, including without any limitation, any supply chain and logistics issues; • Changes in polymer consumption growth rates and laws and regulations regarding plastics in jurisdictions where we conduct business; • Fluctuations in raw material prices, quality and supply, and in energy prices and supply; • Production outages or material costs associated with scheduled or unscheduled maintenance programs; • Unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters; • Our ability to pay regular quarterly cash dividends and the amounts and timing of any future dividends; • Information systems failures and cyberattacks; • Amounts for cash and non-cash charges related to restructuring plans that may differ from original estimates, including because of timing changes associated with the underlying actions; and • Other factors described in our Annual Report on Form 10-K for the year ended December 31, 2021 under Item 1A, “Risk Factors.”
Outdoor High Performance) 8 18% 3 Growth in Asia / LATAM 6 3% 2 Other 100 19% 5 Sub-total $1,327 14% $146 Outdoor High Performance Impact (5) (3) Wage Inflation and Overtime (11) Other Supply Chain Costs (4) Synergies 5 Incentives, Other Employee Costs 8 FX (28) (5) Q1 2022 $1,294 11% $136 Q1 2022 SALES AND OPERATING INCOME (TOTAL COMPANY) 6 Sales Growth Rate Adjusted Operating Income$ millions Adjusted EBITDA Q1 EBITDA BRIDGE 7 Price increases more than offset raw material and supply chain impacts Q1 2021 $ 161 Demand (23) $ millions CAI: Price / Mix 77 Inflation (54) SEM: Price / Mix 41 Inflation (26) Distribution: Price / Mix 84 Inflation (82) Net Price Benefit 40 Wage Inflation and Overtime (11) Other Supply Chain Costs (4) Synergies 5 Incentives, Other Employee Costs 8 FX (5) Q1 2022 $ 171 China Lockdowns / Russia Impact $ (7) Transportation (7) Outdoor High Performance (3) Q1 EPS BRIDGE 8 Q1 2021 - Adjusted EPS 0.89$ CAI 0.08 Specialty Engineered Materials 0.06 Distribution 0.00 Corporate Costs 0.02 F/X (0.04) Segment OI 0.12 Tax Rate (0.02) Q1 2022 - Adjusted EPS 0.99$ 10 15x stronger than steel Reduces weight by 30% vs. other solutions Well-maintained global asset base poised to serve growing demand • Purchase price of $1.48B represents 11.4x multiple of 2022 EBITDA • Acquisition will expand Avient’s composites and fiber portfolio with Dyneema®, the World’s Strongest Fiber™ • $415M sales and 30%+ EBITDA margins; Immediately accretive to pro forma 2022 EPS, adding $0.35 • 1,300 patents globally, ~50% of sales patent protected • 1,000+ employees across global production network and dedicated technology centers • Composites platform will increase from $261M to $680M in revenue and from $49M to $180M in EBITDA Indicates Dyneema® location $175M (42%) $65M (16%) $175M (42%) 2022E Sales By Region ($M) (1) $0.35 EPS excludes intangible amortization (2) Based on 2022 expected results (1) (2) (2) FIT WITH FOUR PILLAR STRATEGY 11 Specialization • Innovation-led organization with tremendous intellectual property value in trademarks, patents and “know-how” • Deep history of application development and premium, leading brand with the World’s Strongest FiberTM Globalization • Global customer base with an established presence across all major geographic regions • Global technology centers complement existing Composites applications and expertise Operational Excellence • Best-in-class safety performance • Well-run and maintained asset base fit to serve future growth • Highly effective and reliable supply chain with emphasis on optimizing service to customers Commercial Excellence • Deep customer relationships extend across the value chain and drive ability to grow • Offer a full suite of services with an active role in design, development and commercialization People Experienced and talented associates with a passion for safety, specialization and winning DYNEEMA® OVERVIEW K E Y I N D U S T R I E S PERSONAL PROTECTION Military • Law Enforcement • First Responders Body Armor • Helmets • Vehicle Protection $215M MARINE & SUSTAINABLE INFRASTRUCTURE Towing / Mooring • Aquaculture • Floating Wind • Offshore Cranes $130M CONSUMER Consumer • Outdoor High Performance • Safety Equipment $70M 12 Figures reflect 2022 expected sales MIFOverview Competition Valuechain & Go-to-market Strategy Innovation Financials TECHNOLOGY 13 1,200 1,300 2,500 Avient Dyneema Combined Patents • True specialty business – the World’s Strongest Fiber™ • Deep history of application development with customers, strongest in the industry • The only UHMwPE (ultra-high molecular weight polyethylene) fiber producer that is backward integrated o Provides innovation advantage through control of all steps of the process • Complementary with our existing reinforced film expertise (PolyStrand) and engineered fiber presences (Fiber-Line) WINNING PROPERTIES Ultra high strength vs. weight Highly flexible Floats on water Chemically inert; no smell/taste and non-toxic High resistance to UV radiation Self-lubricating, with low friction One-of-a-kind technology ® FORMULATION PROCESS 14 • Like Avient, Dyneema® offers similar core competencies around formulation and material science • Technology that combines polymers and fibers to provide specialized, high performing solutions for customers • Design capabilities ensure that applications are highly customized for the specified end use DYNEEMA® IN THE VALUE CHAIN 15 UHMwPE Fiber / Tapes Military Personnel, Law Enforcement Heavy Marine, Offshore Wind Energy and Mooring, Aquaculture Outdoor, Footwear, Apparel, Inflatables • Material Science • Formulation • Service INTERMEDIATE MANUFACTURING (CUSTOMERS) OEM / APPLICATION DEMAND TRENDS 16 • Military spending and near-term demand for higher performing personal protection products (like Dyneema®) expected to increase o European NATO members annual defense spend expected to increase by up to 20%(1) o Accelerated launch of next generation technology in North America • Policy-driven demand for sustainable energy; growth in floating offshore wind farms which require advanced, durable technology o Offshore wind expected to grow at a CAGR of 32% with the level of annual installations quadrupling over the next five years(2) • Continued investment in aquaculture as a sustainable food source(3) • Strong demand in outdoor high performance space across niche consumer applications aligns with 10% growth assumption for Avient’s Composites portfolio Sources: (1) “Funding NATO”, NATO.int (April 1, 2022) (2) “Global Wind Report 2021”, Global Wind Energy Council (3) “Aquaculture Supports a Sustainable Earth”, NOAA Fisheries 17 A L I G N M E N T W I T H S U S T A I N A B I L I T Y G O A L S PRODUCTS AVIENT’S EXISTING COMPOSITES PORTFOLIO D I V E R S E C A P A B I L I T I E S A N D S O L U T I O N S S E R V I N G M A N U F A C T U R E R S A N D O E M S LFT Tapes Laminates/Panels Shapes Pultrusion Engineered Fibers 18 AVIENT’S COMPOSITES PORTFOLIO SALES AND EBITDA 19 $74 $84 $216 $212 $261 $5 $10 $32 $41 $49 $180 0 50 100 150 200 $- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750 2017 2018 2019 2020 2021 2022E $680 ($ in millions) • Dyneema® acquisition will further improve Composites EBITDA margins to 26% • Dyneema® will complement our existing portfolio with deep formulation expertise, innovative culture and global commercial presence • Composites will continue to be a key growth driver to deliver future revenue growth in excess of GDP (1) Pro forma for the acquisition of Dyneema® (1) DISTRIBUTION DIVESTITURE CONSIDERATIONS DISTRIBUTION HIGHLIGHTS 21 $21 $57 $69 $94 $105 0 50 100 150 2006 2011 2016 2021 2022E • Leading North American Distribution business with longstanding blue-chip supplier and customer relationships • Commercial excellence and regulatory knowledge have grown healthcare portfolio to over 25% of sales and positioned business for long-term growth • Highly specialized portfolio of engineered polymers along with sustainable solution offerings • Leading digital capabilities through Avient Now, allowing enhanced visibility and 24/7 interface with customers • 98% free cash flow conversion drives greater than 30% after-tax return on invested capital (ROIC) • Potential divestiture allows us to remain modestly leveraged with net debt to adjusted EBITDA expected to be 2.9x and positions us for further specialty growth in the future EBITDA (in $M) DYNEEMA® TRANSACTION OVERVIEW 22 - $1.48B net purchase price - Represents 11.4x expected 2022 EBITDA - Committed financing in place - Permanent financing to be combination of available cash on-hand, new Senior Unsecured Notes, new Senior Secured Term Loan - Potential proceeds from Distribution divestment could be used to pay down near-term maturing debt - Closing expected in second half of 2022, subject to regulatory approvals and certain customary closing conditions Transaction Value Financing Closing Conditions / Timing CAPITAL STRUCTURE / LEVERAGE 23 • Financing commitments secured from Morgan Stanley and J.P.
Morgan • New Senior Secured Term Loan B and new Senior Unsecured Notes • Potential proceeds from sale of Distribution business modeled to pay off 5.25% senior notes due 2023 and Term Loan • Acquisition aligned with Avient’s track record of disciplined capital allocation policy • Existing dividend policy maintained, focus on deleveraging in the near term (1) (1) Pro forma for the acquisition of Dyneema® and potential divestiture of Distribution, including repayment of senior notes due 2023 and Term Loan Cash and Cash Equivalents 595$ Senior Secured Term Loan due 2026 605$ New Senior Secured Term Loan B 500 Total Senior Secured Debt 1,105$ Senior Unsecured Notes due 2025 650$ New Senior Unsecured Notes 740 Total Senior Unsecured Debt 1,390$ Total Debt 2,495$ Net Debt 1,900$ 2022 Pro forma Adjusted EBITDA 660$ Net Debt / Adjusted EBITDA 2.9x Pro Forma Capitalization (2022 estimates, all figures in $M) TWO-YEAR LEVERAGE GOAL 24 3.5x 2.7x 1.7x 2.9x 2.5x 2.2x 2019PF 2020PF 2022E 2022PF 2023E 2024E Dyneema® AcquisitionClariant Color Acquisition (1) Pro forma for the acquisition of the Clariant Color business (2) Pro forma for the acquisition of Dyneema® and potential divestiture of Distribution, including repayment of senior notes due 2023 and Term Loan (1) (1) (2) 25 PRO FORMA MODELING 2022E Pro Forma Pro Forma ($M) w/ Dyneema w/Sale Revenue 5,100$ 415$ 5,515$ (1,775)$ 3,740$ Adjusted EBITDA 635 130 765 (105) 660 EBITDA % 12% 31% 14% 6% 18% Pro Forma EPS (Adjusted) 3.50$ 0.00$ 3.50$ (0.56)$ 2.94$ Pro Forma EPS (excl. amortization) 3.96$ 0.35$ 4.31$ (0.56)$ 3.75$ Leverage (12/31/2022E) Net Debt / Adjusted EBITDA 1.7x 3.5x 2.9x Avient Dyneema Distribution® ® OUR SPECIALTY JOURNEY ACQUISITION HISTORY 27 Commercial Resources(1) Operating Income ($ in millions) Operating Margins 259 360 At Acquisition 2021 $40 $122 At Acquisition 2021 9% 21% At Acquisition 2021 Established Acquisitions (> 7 years) + 39% + 210% + 1200 bps (1) Commercial Resources include associate headcount in R&D / Technical, Marketing and Sales CLARIANT COLOR ACQUISITION 28 $133 $205 2019PF 2021 28 Clariant Color EBITDA Growth Purchase Price Multiple 10.8x 7.0x 6.1x 2019PF 2021 2021 w/ Full Synergies • Acquisition of Clariant Color business significantly expanded presence in healthcare, packaging and consumer end markets • Strength of portfolio – double-digit annual EBITDA growth since acquisition • $54 million of synergies realized in 2021 • Acquisition completed on July 1, 2020 for $1.45 billion.
https://www.avient.com/sites/default/files/2020-07/avient-abac-spanish-spain-200720.pdf
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