Avient Corporation

Good morning, ladies and gentlemen, and welcome to the Poly1 Corporation 3rd Quarter 2019 Conference Call. My name is Shannon, and I'll be your operator for today. At this time, all participants are in listen-only mode. We will have a question-and-answer session at the end of the conference. As a reminder, this conference is made recorded for replay purposes. At this time, I would like to turn the call over to Joe DeSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you, Shannon. Good morning, and welcome to everyone on the call today. Before beginning, we'd like to remind you that statements made during the conference call may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements will give current expectations or forecasts of future events and are not guarantees of future performance. They're based on management's expectation and involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed and or implied by the forward-looking statement. Some of these risks and uncertainties can be found in these filings with the Securities and Exchange Commission as well as in today's press release. During the discussion today, the company will use both GAAP and non-GAAP financial measures. Please refer to the earnings release posted on the PI-1 website where the company describes the non-GAAP financial measures and provides a reconciliation from the most comparable GAAP financial measures. Unless otherwise stated, operating results referenced during today's call will be comparing the third quarter of 2019 to the third quarter of 2018 on a continuing operations which excludes the PP&S business that is presented as a discontinued operation. Also note that included in attachment eight to the earnings release issued today is an updated summary of the prior period earnings per share showing the impact of the discontinued operations. Joining me today on the call is our Chairman, President, and Chief Executive Officer, Bob Patterson, and Executive Vice President, Chief Financial Officer, Brad Richardson. Now I will turn the call over to Bob.

Thanks, Joe, and good morning, everyone. I'm proud that for the third quarter, we delivered adjusted EPS of 44 cents. That's a 7% increase over the prior year. Our investments in recent acquisitions and sustainable solutions, combined with our cost reduction initiatives, continue to offset a weak demand environment. Specialty engineer materials led the way this quarter, growing operating income 7%. highlighted by our recent acquisition of FiberLine and New Business Gains Composites Portfolio. In fact, organic sales of composite technologies grew 8% in the quarter, and operating income more than doubled over the prior year. Composites, along with performance additives, are two of our high-growth technology platforms, and the difference these technologies are making is reflected in our now less cyclical, more specialty portfolio. With the announced agreement to divest our performance products and solutions segment, we have taken yet another step to further establish us as a specialty company. Following the sale, 80% of Poly1's EBITDA will be generated from specialty formulations, and that's up from 7% from when we began our specialty journey. This latest portfolio enhancement reduces our exposure to cyclical end markets, while at the same time strengthens our balance sheet Proceeds from the sale will provide us increased financial flexibility to accept growth by acquiring additional specialty technologies and investing in innovation focused on sustainable solutions. More on this strategic approach is captured in our just released sustainability report. It's our first ever at Poly One, and I'm going to spend some more time on this topic in my closing remarks. To our customers, colleagues, and friends in the PP&S business, we are excited about your future with SK Capital. We are grateful for your partnership, innovation, and the success we have had together. Since 2006, we have invested in and grown this business, and it has played an important role in our transformation. As we look back on this time, that growth has come from organic initiatives, such as investing in commercial resources, achieving a high level of operational excellence, and, of course, training and innovation. But as a future, the business needs an owner like SK that will look to add acquisitions and incremental investment to help the portfolio achieve an even higher level of performance. SK has big plans for the business, and customers should know they are in good hands. And we count ourselves among them, as PP&S will continue to be a supplier to Poly1 and an important partner for our distribution business. Our distribution is having a record year from an operating income standpoint, and it continues to be a cash flow generating machine. Despite challenges in certain end markets, our distribution benefits from a high degree of healthcare customers as well as engineered resins. Although sales are down, margins have improved on better mix, pricing, and controlling costs. You know, the reality is, overall, macro conditions haven't changed since the beginning of the year, which is why I'm particularly proud of how we differentiated our performance in the quarter and demonstrated our ability to grow the bottom line in this environment. To be clear, some of this is from prudent self-help actions we took earlier this year. We have reduced costs, controlled discretionary spending, and increased our commercial focus on pricing and new business gains to improve mix. And this is what a specialty company does. Our most recent performance demonstrates the growing strength of our portfolio and how our investments and other strategic decisions are paying off in these uncertain times. More on this in a moment, but next Brad will provide a segment review and go a little deeper on our performance for the third quarter. Brad? Well, thank you very much, Bob, and good morning.