Avient Corporation

And bye. Thank you for your patience. Thank you. Good day and thank you for standing by. Welcome to the Q1 2021 Avian Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Ask a question during the session. You will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Joe DiSalvo, Vice President, Treasurer, and Investor Relations.

Please go ahead. Thank you, Joelle, and good morning and welcome to our first quarter 2021 earnings call. Before beginning, we'd like to remind you that statements made during this webcast 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 are 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 in or implied by the forward-looking statement. Please refer to the investor presentation for this webcast posted on AVN's website for a number of factors that could cause actual results to differ. During the discussion today, the company will use both GAAP and non-GAAP financial measures. Please refer to the presentation posted on the AVN website where the company describes non-GAAP measures and provides a reconciliation for historical non-GAAP financial measures to their most directly comparable GAAP financial measures. In addition, unless otherwise stated, comparisons to prior year will be pro forma for the Clarion Master Batch Acquisition, as if the business had been together during all periods referenced. Joining me today is our Chairman, President, and Chief Executive Officer, Bob Patterson, and Senior Vice President and Chief Financial Officer, Jamie Beggs. Now I will turn the call over to Bob for some opening comments.

Well, thank you, Joe, and good morning, everyone. We have record results to share today, as well as increased optimism for the rest of the year as demand conditions are stronger than previously expected. While the world still has a long way to go with respect to combating COVID-19, we are optimistic that as an increasing percentage of the world's population receives the vaccination, this too will help drive demand. We start today and begin by reviewing our results for Q1. where we achieved the highest level of organic sales growth in the last 10 years. Certainly, we're benefiting from a pandemic recovery, but our results are also a result of many things and a lot of hard work. Our performance is underpinned by the investments we have made to transform our portfolio to one that is more specialized, focused on sustainable solutions, and concentrated on high growth and markets. And our team delivered these results despite supply chain disruptions that have impacted most everyone in the industry. We thank our suppliers and our own supply chain leaders for exemplary work to make this possible. I'm also pleased we were able to expand operating margins by 200 basis points during a period of inflation by being on top of pricing, capturing synergies ahead of schedule, and an improving mix of product sales. And this is all translated to adjusted operating income growth of 43 percent and adjusted EPS growth of 68 percent. All three of our business segments contributed to our success, each delivering record revenue and operating income for the quarter. Our color business grew operating income 39 percent due to robust demand for consumer applications as well as sustainable solutions. We are also benefiting from early synergy capture related to the Clariant Master Batch acquisition. Specialty engineering materials expanded operating income 55%, driven by continued strength and sales of our composite technologies, as well as new business gains in healthcare and consumer applications. And last but certainly not least, our distribution segment delivered record operating income of $24 million, an increase of 26% over the prior year. This was led by strong demand and new business closes in healthcare and consumer. Truly outstanding performance by all of our segments to begin the year. It's an honor statement to say that we have been investing in sustainable solutions and new technologies such as composites that serve high growth and markets. Over the years, our portfolio has undergone a tremendous and deliberate transformation with an increased focus on specialty applications. Not only has this been an important contributor to our recent growth, but the benefits of improved mix are clearly driving higher margins despite raw material inflation. For investors who followed us in our early years, you know margin expansion was a hallmark of our success. Now, as Avian, it is and will be again. When we announced the acquisition of Clariant Master Batch, there were some questions regarding our ability to improve the margins to the level of the legacy Poly 1 color business. I'm pleased to report that in the first nine months of ownership, we have made significant progress in this regard, while also seeing an uptick in legacy Poly 1 margins. For the legacy clarion business, we have expanded EBITDA margins from 11.9% to 17.4%. I have to say there is so much energy and excitement that is being generated from the combined organizations, even in this primarily virtual environment. I've seen a number of integration efforts over the years and couldn't be more proud of how we have come together culturally and operationally for each other and our customers. As our teams continue to work together, we have been able to accelerate our synergy capture and realize $11 million in the first quarter. And in addition, we expect the full year realization to be 45 million, up from our previous estimate of 35 a few months ago. During our February webcast, we provided a bridge on the key drivers behind our 2021 growth projections. which included sustainable solutions, healthcare, composites, and growth outside the U.S. in emerging regions. We've updated this bridge for Q1 performance, and you can see how these drivers contributed to our first quarter results. And these are the same areas that you will continue to hear us refer to when discussing our ability to grow in excess of the market over the long term. From an end market perspective, our largest segments, which are tied to long-term growth platforms, performed exceptionally well during the quarter. In particular, healthcare and consumer applications led the way with 22% and 24% growth, respectively. You may look at packaging and question its relative performance, but don't. This simply reflects how well packaging did in the early days of the pandemic last year, and specifically in Asia, which was impacted most in Q1 in 2020. The health of our focused end markets are a big reason we are delivering record levels of revenue and operating income. Combined with the optimism from the ongoing vaccine rollout, it gives us growing confidence in the economy and our ability to deliver. So as you read in our news release this morning, we have increased our outlook for the year, which Jamie will now cover as part of her remarks. Jamie?