10-Q 1 avnt-20220630.htm 10-Q avnt-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________
FORM 10-Q
________________________________________________
(Mark One)
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022
OR
 
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to             .
Commission file number 1-16091
 ________________________________________________
AVIENT CORPORATION
(Exact name of registrant as specified in its charter)
________________________________________________
Ohio34-1730488
(State or other jurisdiction(I.R.S. Employer Identification No.)
of incorporation or organization)
Avient Center
33587 Walker Road44012
Avon Lake, Ohio
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (440930-1000
Former name, former address and former fiscal year, if changed since last report: Not Applicable
_______________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, par value $.01 per shareAVNTNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No

The number of the registrant’s outstanding common shares, par value $.01 per share, as of June 30, 2022 was 90,936,943.

AVIENT CORPORATION


PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Avient Corporation
Condensed Consolidated Statements of Income (Unaudited)
(In millions, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Sales$1,302.4 $1,235.2 $2,596.2 $2,397.5 
Cost of sales998.6 946.5 1,998.7 1,806.4 
Gross margin303.8 288.7 597.5 591.1 
Selling and administrative expense174.3 180.6 339.4 362.6 
Operating income129.5 108.1 258.1 228.5 
Interest expense, net(16.2)(19.5)(33.1)(38.8)
Other income, net1.4 1.2 0.8 2.7 
Income before income taxes114.7 89.8 225.8 192.4 
Income tax expense(30.0)(20.4)(56.6)(43.3)
Net income84.7 69.4 169.2 149.1 
Net income attributable to noncontrolling interests (0.6)(0.3)(1.0)
Net income attributable to Avient common shareholders$84.7 $68.8 $168.9 $148.1 
Earnings per share attributable to Avient common shareholders - Basic$0.93 $0.75 $1.85 $1.62 
Earnings per share attributable to Avient common shareholders - Diluted$0.92 $0.74 $1.83 $1.60 
Weighted-average shares used to compute earnings per common share:
Basic91.4 91.3 91.4 91.3 
Dilutive impact of share-based compensation0.7 1.1 0.8 1.0 
Diluted92.1 92.4 92.2 92.3 
Anti-dilutive shares not included in diluted common shares outstanding0.2  0.3  
Cash dividends declared per share of common stock$0.2375 $0.2125 $0.4750 $0.4250 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

1 AVIENT CORPORATION


Avient Corporation
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions)
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net income$84.7 $69.4 $169.2 $149.1 
Other comprehensive (loss) income, net of tax:
Translation adjustments and related hedging instruments(50.2)9.5 (59.3)(41.5)
Cash flow hedges0.9 0.7 2.1 1.5 
Total other comprehensive (loss) income(49.3)10.2 (57.2)(40.0)
Total comprehensive income35.4 79.6 112.0 109.1 
Comprehensive income attributable to noncontrolling interests (0.6)(0.3)(1.0)
Comprehensive income attributable to Avient common shareholders$35.4 $79.0 $111.7 $108.1 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

2 AVIENT CORPORATION


Avient Corporation
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited) June 30, 2022
December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$645.1 $601.2 
Accounts receivable, net752.6 642.3 
Inventories, net494.0 461.1 
Other current assets128.4 122.4 
Total current assets2,020.1 1,827.0 
Property, net638.9 676.1 
Goodwill1,256.8 1,286.4 
Intangible assets, net867.2 925.2 
Operating lease assets, net62.7 74.1 
Other non-current assets197.9 208.4 
Total assets$5,043.6 $4,997.2 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term and current portion of long-term debt$607.7 $8.6 
Accounts payable634.0 553.9 
Current operating lease obligations21.4 24.2 
Accrued expenses and other current liabilities307.5 353.9 
Total current liabilities1,570.6 940.6 
Non-current liabilities:
Long-term debt1,249.1 1,850.3 
Pension and other post-retirement benefits95.0 100.0 
Deferred income taxes106.6 100.6 
Non-current operating lease obligations41.8 50.1 
Other non-current liabilities154.7 165.1 
Total non-current liabilities1,647.2 2,266.1 
SHAREHOLDERS' EQUITY
Avient shareholders’ equity1,809.7 1,774.7 
Noncontrolling interest16.1 15.8 
Total equity1,825.8 1,790.5 
Total liabilities and equity$5,043.6 $4,997.2 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

3 AVIENT CORPORATION


Avient Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
 Six Months Ended
June 30,
 20222021
Operating Activities
Net income$169.2 $149.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization71.1 69.5 
Accelerated depreciation and amortization3.2 1.4 
Share-based compensation expense6.3 5.6 
Changes in assets and liabilities, net of the effect of acquisitions:
Increase in accounts receivable(133.2)(196.1)
Increase in inventories(45.9)(88.1)
Increase in accounts payable98.5 108.4 
Decrease in pension and other post-retirement benefits(9.9)(9.2)
(Decrease) increase in accrued expenses and other assets and liabilities, net(52.6)27.5 
Net cash provided by operating activities106.7 68.1 
Investing activities
Capital expenditures(34.0)(42.1)
Settlement of cross-currency swaps75.1  
Net cash proceeds used by other assets (2.0)
Net cash provided (used) by investing activities41.1 (44.1)
Financing activities
Purchase of common shares for treasury(36.4)(4.2)
Cash dividends paid(43.5)(38.8)
Repayment of long-term debt(4.4)(4.4)
Payments of withholding tax on share awards(4.1)(4.2)
Net cash used by financing activities(88.4)(51.6)
Effect of exchange rate changes on cash(15.5)(5.7)
Increase (decrease) in cash and cash equivalents43.9 (33.3)
Cash and cash equivalents at beginning of year601.2 649.5 
Cash and cash equivalents at end of period$645.1 $616.2 
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

4 AVIENT CORPORATION


Avient Corporation
Consolidated Statements of Shareholders' Equity (Unaudited)
(In millions)
 Common SharesShareholders’ Equity
Common
Shares
Common
Shares Held
in Treasury
Common
Shares
Additional
Paid-in
Capital
Retained EarningsCommon
Shares Held
in Treasury
Accumulated
Other
Comprehensive
(Loss) Income
Total Avient shareholders' equityNon-controlling InterestsTotal equity
Balance at January 1, 2022122.2 (30.6)$1.2 $1,511.8 $1,208.0 $(900.7)$(45.6)$1,774.7 $15.8 $1,790.5 
Net income— — — — 84.2 — — 84.2 0.3 84.5 
Other comprehensive loss— — — — — — (7.9)(7.9)— (7.9)
Cash dividends declared (1)
— — — — (21.7)— — (21.7)— (21.7)
Repurchase of common shares— (0.3)— — — (15.8)— (15.8)— (15.8)
Share-based compensation and exercise of awards— 0.1 — (2.2)— 1.9 — (0.3)— (0.3)
Balance at March 31, 2022122.2 (30.8)$1.2 $1,509.6 $1,270.5 $(914.6)$(53.5)$1,813.2 $16.1 $1,829.3 
Net income— — — — 84.7 — — 84.7 84.7 
Other comprehensive income— — — — — — (49.3)(49.3)— (49.3)
Cash dividends declared (1)
— — — — (21.7)— — (21.7)— (21.7)
Repurchase of common shares— (0.5)— — — (20.6)— (20.6)— (20.6)
Share-based compensation and exercise of awards— — — 3.4 —  — 3.4 — 3.4 
Balance at June 30, 2022122.2 (31.3)$1.2 $1,513.0 $1,333.5 $(935.2)$(102.8)$1,809.7 $16.1 $1,825.8 
(1) Dividends declared per share were $0.2375 and $0.4750 for the three and six months ended June 30, 2022, respectively.
 Common SharesShareholders’ Equity
Common
Shares
Common
Shares  Held
in Treasury
Common
Shares
Additional
Paid-in
Capital
Retained EarningsCommon
Shares  Held
in Treasury
Accumulated
Other
Comprehensive
(Loss) Income
Total Avient shareholders' equityNon-controlling InterestsTotal equity
Balance at January 1, 2021122.2 (30.8)$1.2 $1,513.3 $1,057.4 $(901.2)$26.4 $1,697.1 $14.6 $1,711.7 
Net income— — — — 79.3 — — 79.3 0.4 79.7 
Other comprehensive loss— — — — — — (50.2)(50.2)— (50.2)
Cash dividends declared (1)
— — — — (19.5)— — (19.5)— (19.5)
Repurchase of common shares— (0.1)— — — (4.2)— (4.2)— (4.2)
Share-based compensation and exercise of awards— 0.1 — 2.9 — 1.6 — 4.5 — 4.5 
Balance at March 31, 2021122.2 (30.8)$1.2 $1,516.2 $1,117.2 $(903.8)$(23.8)$1,707.0 $15.0 $1,722.0 
Net income— — — — 68.8 — — 68.8 0.6 69.4 
Other comprehensive income— — — — — — 10.2 10.2 — 10.2 
Noncontrolling interest activity— — — — — — — — 2.6 2.6 
Cash dividends declared (1)
— — — — (19.4)— — (19.4)— (19.4)
Share-based compensation and exercise of awards—  — 1.0 — 0.6 — 1.6 — 1.6 
Balance at June 30, 2021122.2 (30.8)$1.2 $1,517.2 $1,166.6 $(903.2)$(13.6)$1,768.2 $18.2 $1,786.4 
(1) Dividends declared per share were $0.2125 and $0.4250 for the three and six months ended June 30, 2021, respectively.
See accompanying Notes to the Unaudited Condensed Consolidated Financial Statements.

5 AVIENT CORPORATION



Avient Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 — BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments, including those that are normal, recurring and necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. These interim financial statements should be read in conjunction with the financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2021 of Avient Corporation, formerly known as PolyOne Corporation. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation and its consolidated subsidiaries.
Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be attained in subsequent periods or for the year ending December 31, 2022.
Note 2 — BUSINESS COMBINATIONS
On April 19, 2022, we entered into a signing protocol (the Signing Protocol) with Koninklijke DSM N.V., a public limited liability company incorporated under the laws of the Netherlands (DSM). Pursuant to the terms of the Signing Protocol, Avient and DSM agreed that, after completion of the consultation process with the relevant Dutch works council, they would will enter into a Sale and Purchase Agreement (the Purchase Agreement) pursuant to which Avient will, among other things, acquire from DSM (a) all of the equity of DSM Protective Materials International B.V., a private limited liability company organized under the laws of the Netherlands, DSM Protective Materials B.V., a private limited liability company organized under the laws of the Netherlands, and DSM Protective Materials LLC, a Delaware limited liability company, and (b) certain other assets related to DSM's protective materials business (including the Dyneema© Brand) (such equity and assets together, the Dyneema Business) (such acquisition of the Dyneema Business, the Dyneema Acquisition). Avient and DSM entered into the Purchase Agreement on June 23, 2022.
Pursuant to the terms of the Purchase Agreement, we have agreed to acquire the Dyneema Business for an aggregate purchase price of €1.38 billion, subject to certain customary adjustments for a European “locked box” transaction (the Purchase Price). Certain Purchase Price payments are Euro-denominated and are subject to change based on fluctuations in the euro-U.S. dollar exchange rate. The closing of the Dyneema Acquisition will be subject to the satisfaction or waiver of customary and other conditions. We have received all required regulatory approvals.
In conjunction with our intent to acquire the Dyneema Business, we are exploring a potential sale of our Distribution business.
On July 1, 2021, the Company completed its acquisition of Magna Colours Ltd. (Magna Colours), a market leader in sustainable, water-based inks technology for the textile screen printing industry, for the purchase price of $47.6 million, net of cash acquired. The results of the Magna Colours business are reported in the Color, Additives and Inks segment. The purchase price allocation resulted in intangible assets of $27.5 million and goodwill of $22.0 million, partially offset by net liabilities assumed. Goodwill is not deductible for tax purposes. The intangible assets that have been acquired are being amortized over a period of 10 to 20 years. Purchase accounting was finalized as of June 30, 2022.


6 AVIENT CORPORATION



Note 3 — GOODWILL AND INTANGIBLE ASSETS
Goodwill as of June 30, 2022 and December 31, 2021 and changes in the carrying amount of goodwill by segment were as follows:
(In millions)Specialty Engineered MaterialsColor, Additives and InksDistributionTotal
Balance at December 31, 2021$236.3 $1,048.5 $1.6 $1,286.4 
Currency translation(1.6)(28.0) (29.6)
Balance at June 30, 2022$234.7 $1,020.5 $1.6 $1,256.8 

Indefinite and finite-lived intangible assets consisted of the following:
 As of June 30, 2022
(In millions)Acquisition CostAccumulated AmortizationCurrency TranslationNet
Customer relationships$507.2 $(148.3)$(6.5)$352.4 
Patents, technology and other566.7 (149.0)(15.9)401.8 
Indefinite-lived trade names113.2 — (0.2)113.0 
Total$1,187.1 $(297.3)$(22.6)$867.2 

 As of December 31, 2021
(In millions)Acquisition CostAccumulated AmortizationCurrency TranslationNet
Customer relationships$507.2 $(135.4)$6.0 $377.8 
Patents, technology and other566.7 (134.3)1.8 434.2 
Indefinite-lived trade names113.2 — — 113.2 
Total$1,187.1 $(269.7)$7.8 $925.2 

Note 4 — LEASING ARRANGEMENTS
We lease certain manufacturing facilities, warehouse space, machinery and equipment, vehicles and information technology equipment. The majority of our leases are operating leases. Finance leases are immaterial to our condensed consolidated financial statements. Operating lease assets and obligations are reflected within Operating lease assets, net, Current operating lease obligations, and Non-current operating lease obligations, respectively, on the Condensed Consolidated Balance Sheets.
Lease expense is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Condensed Consolidated Statements of Income were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(In millions)2022202120222021
Cost of sales$4.8 $5.5 $9.2 $9.3 
Selling and administrative expense2.2 3.4 4.5 7.8 
Total operating lease cost$7.0 $8.9 $13.7 $17.1 

We often have options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for our operating leases as of June 30, 2022 and 2021 was 4.8 years and 4.9 years, respectively.


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The discount rate implicit within our leases is generally not determinable and, therefore, the Company determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate for our leases is determined based on lease term and currency in which lease payments are made, adjusted for impacts of collateral. The weighted average discount rates used to measure our operating lease liabilities as of June 30, 2022 and 2021 were 3.7%.
Maturity Analysis of Operating Lease Liabilities:
As of June 30, 2022
(In millions)
2022$12.4 
202319.9 
202412.9 
20258.1 
20265.0 
Thereafter11.3 
Total lease payments69.4 
Less amount of lease payment representing interest(6.2)
Total present value of lease payments$63.2 

Note 5 — INVENTORIES, NET
Components of Inventories, net are as follows:
(In millions)As of June 30, 2022As of December 31, 2021
Finished products$252.7 $244.4 
Work in process26.1 21.2 
Raw materials and supplies215.2 195.5 
Inventories, net$494.0 $461.1 

Note 6 — PROPERTY, NET
Components of Property, net are as follows:
(In millions)As of June 30, 2022As of December 31, 2021
Land and land improvements$86.1 $91.5 
Buildings344.3 350.6 
Machinery and equipment968.5 972.3 
Property, gross1,398.9 1,414.4 
Less accumulated depreciation(760.0)(738.3)
Property, net$638.9 $676.1 

Note 7 — INCOME TAXES
During the three and six months ended June 30, 2022, the Company’s effective tax rate of 26.1% and 25.0%, respectively, was above the U.S. federal statutory rate of 21.0% primarily due to state taxes, foreign withholding tax liability accrued associated with the future repatriation of certain current year foreign earnings, and global intangible low-taxed income (GILTI) tax. These unfavorable items were partially offset by the U.S. research and development tax credit.
During the three and six months ended June 30, 2021, the Company’s effective tax rate of 22.6% and 22.5%, respectively, was above the U.S. federal statutory rate of 21.0% primarily due to state taxes, foreign withholding tax liability accrued associated with the future repatriation of certain current year foreign earnings and GILTI tax. These unfavorable items were partially offset by changes in net foreign deferred tax assets from a foreign statutory tax rate change, favorable prior year foreign return-to-provision adjustments and U.S. research and development tax credit.


8 AVIENT CORPORATION



Note 8 — FINANCING ARRANGEMENTS
Debt consists of the following instruments:
As of June 30, 2022 (in millions)Principal AmountUnamortized discount and debt issuance costNet DebtWeighted average interest rate
Senior secured revolving credit facility due 2026$ $ $  %
Senior secured term loan due 2026608.2 5.3 602.9 2.21 %
5.25% senior notes due 2023
600.0 0.8 599.2 5.25 %
5.75% senior notes due 2025
650.0 5.9 644.1 5.75 %
Other Debt10.6  10.6 
Total Debt1,868.8 12.0 1,856.8 
Less short-term and current portion of long-term debt608.5 0.8 607.7 
Total long-term debt, net of current portion$1,260.3 $11.2 $1,249.1 
As of December 31, 2021 (in millions)Principal AmountUnamortized discount and debt issuance costNet DebtWeighted average interest rate
Senior secured revolving credit facility due 2026$ $ $  %
Senior secured term loan due 2026611.5 6.2 605.3 1.85 %
5.25% senior notes due 2023
600.0 1.4 598.6 5.25 %
5.75% senior notes due 2025
650.0 6.8 643.2 5.75 %
Other Debt11.8  11.8 
Total Debt1,873.3 14.4 1,858.9 
Less short-term and current portion of long-term debt8.6  8.6 
Total long-term debt, net of current portion$1,864.7 $14.4 $1,850.3 
As of June 30, 2022, we had no borrowings outstanding under our Revolving Credit Facility, which had remaining availability of $487.1 million.
The agreements governing our senior secured revolving credit facility, our senior secured term loan, and the indentures and credit agreements governing other debt contain a number of customary financial and restrictive covenants that, among other things, limit our ability to: consummate asset sales, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct. As of June 30, 2022, we were in compliance with all covenants.
The estimated fair value of Avient’s debt instruments at June 30, 2022 and December 31, 2021 was $1,826.7 million and $1,917.7 million, respectively. The fair value of Avient’s debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and represent Level 2 measurements within the fair value hierarchy.
In connection with the Dyneema Acquisition, on April 19, 2022, we entered into a Commitment Letter with Morgan Stanley Senior Funding, Inc. and J.P. Morgan (the Commitment Parties), pursuant to which the Commitment Parties committed to provide us with a $640.0 million senior secured term loan facility and a $900.0 million senior unsecured bridge loan (the Bridge Facility) for purposes of funding the Dyneema Acquisition. The commitment is subject to various conditions, including the execution of definitive documentation and other customary closing conditions. We currently intend to issue new senior long-term debt in lieu of borrowing under the Bridge Facility.
Note 9 — SEGMENT INFORMATION
Avient has three reportable segments: (1) Color, Additives and Inks; (2) Specialty Engineered Materials; and (3) Distribution. Operating income is the primary measure that is reported to our chief operating decision maker (CODM) for purposes of allocating resources to the segments and assessing their performance. Operating income at the segment level does not include: corporate general and administrative expenses that are not allocated to segments; intersegment sales and profit eliminations; charges related to specific strategic initiatives such as the consolidation of operations; restructuring activities, including employee separation costs resulting from personnel reduction programs, plant closure and phase-in costs; executive separation agreements; share-based compensation costs; asset impairments; environmental remediation costs, along with related gains from insurance recoveries, and other

9 AVIENT CORPORATION


liabilities for facilities no longer owned or closed in prior years; gains and losses on the divestiture of joint ventures and equity investments; actuarial gains and losses associated with our pension and other post-retirement benefit plans; and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate and eliminations.
Segment information for the three and six months ended June 30, 2022 and 2021 is as follows:
 Three Months Ended
June 30, 2022
Three Months Ended
June 30, 2021
(In millions)Sales to
External
Customers
Total SalesOperating
Income
Sales to
External
Customers
Total SalesOperating
Income
Color, Additives and Inks$646.8 $649.1 $93.6 $622.3 $624.4 $86.3 
Specialty Engineered Materials223.8 243.9 36.6 219.1 240.6 37.3 
Distribution431.8 443.2 27.1 392.1 404.4 23.7 
Corporate and eliminations (33.8)(27.8)1.7 (34.2)(39.2)
Total$1,302.4 $1,302.4 $129.5 $1,235.2 $1,235.2 $108.1 
 Six Months Ended
June 30, 2022
Six Months Ended
June 30, 2021
(In millions)Sales to
External
Customers
Total SalesOperating
Income
Sales to
External
Customers
Total SalesOperating
Income
Color, Additives and Inks$1,294.8 $1,298.6 $188.1 $1,230.2 $1,233.7 $175.1 
Specialty Engineered Materials447.1 488.6 76.3 414.9 457.1 71.5 
Distribution854.3 876.1 51.3 747.0 767.1 47.7 
Corporate and eliminations (67.1)(57.6)5.4 (60.4)(65.8)
Total$2,596.2 $2,596.2 $258.1 $2,397.5 $2,397.5 $228.5 

 Total Assets
(In millions)As of June 30, 2022As of December 31, 2021
Color, Additives and Inks$2,933.9 $2,965.2 
Specialty Engineered Materials783.3 771.0 
Distribution404.3 384.9 
Corporate and eliminations922.1 876.1 
Total assets$5,043.6 $4,997.2 

Note 10 — COMMITMENTS AND CONTINGENCIES
We have been notified by federal and state environmental agencies and by private parties that we may be a potentially responsible party (PRP) in connection with the environmental investigation and remediation of certain sites. While government agencies frequently assert that PRPs are jointly and severally liable at these sites, in our experience, the interim and final allocations of liability costs are generally made based on the relative contribution of waste. We may also initiate corrective and preventive environmental projects of our own to ensure safe and lawful activities at our operations. We believe that compliance with current governmental regulations at all levels will not have a material adverse effect on our financial position, results of operations or cash flows.
In September 2007, the United States District Court for the Western District of Kentucky (Court) in the case of Westlake Vinyls, Inc. v. Goodrich Corporation, et al., held that Avient must pay the remediation costs at the former Goodrich Corporation Calvert City facility (now largely owned and operated by Westlake Vinyls, Inc. (Westlake Vinyls)), together with certain defense costs of Goodrich Corporation. The rulings also provided that Avient can seek indemnification for contamination attributable to Westlake Vinyls.



10 AVIENT CORPORATION


Following the rulings, the parties to the litigation agreed to settle all claims regarding past environmental costs incurred at the site. The settlement agreement provides a mechanism to pursue allocation of future remediation costs at the Calvert City site to Westlake Vinyls. We will adjust our accrual, in the future, consistent with any such future allocation of costs. Additionally, we continue to pursue available insurance coverage related to this matter and recognize gains as we receive reimbursement.
The environmental obligation at the site arose as a result of an agreement between The B.F. Goodrich Company (n/k/a Goodrich Corporation) and our predecessor, The Geon Company, at the time of the initial public offering in 1993. Under the agreement, The Geon Company agreed to indemnify Goodrich Corporation for certain environmental costs at the site. Neither Avient nor The Geon Company ever operated the facility.
Since 2009, Avient, along with respondents Westlake Vinyls, and Goodrich Corporation, has worked with the United States Environmental Protection Agency (USEPA) to address contamination at the site. The USEPA issued its Record of Decision (ROD) in September 2018, selecting a remedy consistent with our accrual assumptions. In April 2019, the respondents signed an Administrative Settlement Agreement and Order on Consent with the USEPA to conduct the remedial design actions at the site. In February 2020, the respondents signed the agreed Consent Decree and remedial action Work Plan, which received Federal Court approval in January 2021. Our current reserve totals $107.7 million for this matter. During the three and six months ended June 30, 2022, Avient recognized $3.0 million and $5.0 million of expense, respectively, related to environmental remediation costs, compared to $12.5 million and $13.0 million recognized during the three and six months ended June 30, 2021, respectively.
During the three and six months ended June 30, 2022, Avient received $7.6 million and $8.2 million, respectively, of insurance recoveries for previously incurred environmental costs. During the six months ended June 30, 2021, Avient received $4.5 million of insurance recoveries. These expenses and insurance recoveries are included within Cost of sales within our Condensed Consolidated Statements of Income.
Our Condensed Consolidated Balance Sheets include accruals totaling $119.9 million and $124.5 million as of June 30, 2022 and December 31, 2021, respectively, based on our estimates of probable future environmental expenditures relating to previously contaminated sites. These undiscounted amounts are included in Accrued expenses and other current liabilities and Other non-current liabilities on the accompanying Condensed Consolidated Balance Sheets. The accruals represent our best estimate of probable future costs that we can reasonably estimate, based upon currently available information and technology and our view of the most likely remedy. Depending upon the results of future testing, completion and results of remedial investigation and feasibility studies, the ultimate remediation alternatives undertaken, changes in regulations, technology development, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued at June 30, 2022. However, such additional costs, if any, cannot be currently estimated.
Avient is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations, tax audits, product claims, personal injuries, and employment related matters. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes our current reserves are appropriate and these matters will not have a material adverse effect on the condensed consolidated financial statements.
Note 11 — DERIVATIVES AND HEDGING
We are exposed to market risks, such as changes in foreign currency exchange rates and interest rates. To manage the volatility related to these exposures we may enter into various derivative transactions. We formally assess, designate and document, as a hedge of an underlying exposure, the qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, we assess both at inception and at least quarterly thereafter, whether the financial instruments used in the hedging transaction are effective at offsetting changes in either the fair values or cash flows of the underlying exposures. In accordance with ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), that ongoing assessment will be done qualitatively for highly effective relationships.
Net Investment Hedge
As a means of mitigating the future impact of currency fluctuations on our euro investments in foreign entities, we enter into cross currency swaps in which we generally pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars. In April and May 2022, we settled €1.0 billion of our existing cross currency swaps and concurrently entered into €1.1 billion of new cross currency swaps, to align with our planned financing of the Dyneema Acquisition, receiving cash proceeds of $75.1 million. We currently have 11 cross currency swaps with a combined notional amount of €1.4 billion with maturities in 2023 and 2028. These effectively convert a portion of our U.S. dollar denominated fixed-rate debt to euro denominated fixed-rate debt. Included in Interest expense, net within the

11 AVIENT CORPORATION


Condensed Consolidated Statements of Income are gains of $7.0 million and $12.6 million for the three and six months ended June 30, 2022, compared to gains of $3.5 million and $7.0 million for the three and six months ended June 30, 2021, respectively.
We designated the cross currency swaps as net investment hedges of our net investment in our European operations under ASU 2017-12 and applied the spot method to these hedges. The changes in fair value of the derivative instruments that are designated and qualify as hedges of net investments in foreign operations are recognized within Accumulated Other Comprehensive Income (AOCI) to offset the changes in the values of the net investment being hedged. For the three and six months ended June 30, 2022, gains of $45.2 million and $52.0 million were recognized within translation adjustments in AOCI, net of tax, respectively, compared to a loss of $5.2 million and a gain of $17.7 million for the three and six months ended June 30, 2021, respectively.
Derivatives Designated as Cash Flow Hedging Instruments
In August 2018, we entered into two interest rate swaps with a combined notional amount of $150.0 million to manage the variability of cash flows in the interest rate payments associated with our existing LIBOR-based interest payments, effectively converting $150.0 million of our floating rate debt to a fixed rate. We began to receive floating rate interest payments based upon one-month U.S. dollar LIBOR and in return are obligated to pay interest at a fixed rate of 2.732% until November 2022. We have designated these interest rate swap contracts as cash flow hedges pursuant to ASC Topic 815, Derivatives and Hedging. The net interest payments accrued are reflected in net income as adjustments of interest expense and the remaining change in the fair value of the derivatives is recorded as a component of AOCI. The amount of expense recognized within Interest expense, net in our Condensed Consolidated Statements of Income was $0.6 million and $1.6 million for the three and six months ended June 30, 2022, compared to $1.0 million and $2.0 million for the three and six months ended June 30, 2021. For the three and six months ended June 30, 2022, gains of $0.9 million and $2.1 million, net of tax, were recognized in AOCI, compared to gains of $0.7 million $1.5 million for the three and six months ended June 30, 2021.
Derivatives Not Designated for Hedge Accounting
On April 20, 2022, we executed additional cross currency swaps, pursuant to which we will pay fixed-rate interest in euros and receive fixed-rate interest in U.S. dollars with a combined notional amount of €900 million, which mature in April 2028, as a means of mitigating the impact of currency fluctuations on our future euro investments in foreign entities related to the Dyneema Acquisition. Additionally, we entered into foreign currency forward contracts with an aggregate notional amount of €350 million, which are scheduled to mature within one year, to mitigate the impact of currency fluctuations on the euro-denominated Purchase Price for the Dyneema Acquisition. Changes in the fair value of the cross-currency swaps and foreign exchange forward contracts are recorded in earnings directly. The amount of income recognized within Other income, net in our Condensed Consolidated Statements of Income was $0.9 million for the three and six months ended June 30, 2022.
All of our derivative assets and liabilities measured at fair value are classified as Level 2 within the fair value hierarchy. We determine the fair value of our derivatives based on valuation methods, which project future cash flows and discount the future amounts present value using market based observable inputs, including interest rate curves and foreign currency rates.

The fair value of derivative financial instruments recognized in the Condensed Consolidated Balance Sheets is as follows:
(In millions)Balance Sheet Location
As of
June 30, 2022
As of December 31, 2021
Assets
Cross Currency Swaps (Net Investment Hedge)Other current assets$22.6 $ 
Cross Currency Swaps (Net Investment Hedge)
Other non-current assets10.9 31.7
Mark-to-Market Cross Currency SwapsOther non-current assets13.0  
Liabilities
Interest Rate Swaps (Cash Flow Hedge)
Other current liabilities$0.2 $3.1 
Mark-to-Market Foreign Exchange ForwardsOther current liabilities12.1  




12 AVIENT CORPORATION


Note 12 — SUBSEQUENT EVENTS

During July 2022, we settled €2.3 billion of our existing 2023 and 2025 cross-currency swaps and concurrently entered into €2.4 billion of new cross currency swaps, receiving cash proceeds of $65.6 million.

13 AVIENT CORPORATION


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our Business
We are a premier provider of specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Our products include specialty engineered materials, advanced composites, color and additive systems and polymer distribution. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants, and fluoropolymer and silicone colorants. Headquartered in Avon Lake, Ohio, we have employees at sales, manufacturing and distribution facilities across the globe. We provide value to our customers through our ability to link our knowledge of polymers and formulation technology with our manufacturing and supply chain capabilities to provide value-added solutions to designers, assemblers and processors of plastics. When used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” “Avient” and the “Company” mean Avient Corporation, formerly known as PolyOne Corporation, and its consolidated subsidiaries.
Highlights and Executive Summary
A summary of Avient’s sales, operating income, net income and net income attributable to Avient common shareholders follows:
 Three Months Ended
June 30,
Six Months Ended
June 30,
(In millions)2022202120222021
Sales$1,302.4 $1,235.2 $2,596.2 $2,397.5 
Operating in