Avient Corporation

Good morning, ladies and gentlemen, and welcome to the Aviant Corporation's webcast to discuss the company's second quarter 2023 results. My name is Catherine, and I'll be your operator for today. At this time, all participants are in a listen-only mode. We will have a question and answer session following the company's prepared remarks. As a reminder, this conference is being recorded for replay purposes. I would now turn the call over to Joe DiSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you, Catherine, and good morning to everyone joining us on the call today. Before beginning, we'd like to remind you that statements made during this webcast may be considered forward-looking statements. 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 in or implied by the forward-looking statements. Please refer to the investor presentation for this webcast for a number of factors that could cause actual results of this. During the discussion today, the company will use both GAAP and non-GAAP financial measures. Please refer to the presentation posted on the Avian website where the company describes the non-GAAP measures and provides a reconciliation to their most comparable GAAP financial measures. Joining me today is our Chairman, President, and Chief Executive Officer, Bob Patterson, and Senior Vice President and Chief Financial Officer, Jamie Begg. Now I will hand the call off to Bob to begin.

Thanks, Joe, and good morning. Today we reported our second quarter results. Adjusted EPS of 63 cents exceeded our guidance, driven by better than projected margins in both segments. Raw material deflation was a net positive, and our composites portfolio continues to be resilient in an otherwise challenging environment. Composites is an area that we have grown through a series of acquisitions and incremental commercial investment, and now makes up about 20% of our business. Composites offer a lighter weight option with strength and design flexibility that other materials simply cannot. Since 2012, we invested in six technologies to build out this portfolio that now includes long fiber, tapes, laminates, protrusion, and engineered fibers. Our goal has been to acquire businesses where we can add commercial resources to drive growth, and specifically in end markets and applications that are underserved or not served at all by composite players today. From a performance standpoint, our composite businesses are holding up well in the current economic downturn. Dyneema is the latest addition to our portfolio and couldn't have come at a more important time. It's the world's strongest fiber and utilized in defense and other end markets where failure is simply not an option. Year-to-date demand for personal protection is up 13% and expected to increase as the year progresses. 85% of our composite materials serve the following five end markets. Personal protection or defense applications include body armor and helmets that rely on Dyneema fiber and its unrivaled performance Lightweight and high-strength combination provide the highest level of protection for women and men in the military and law enforcement, while also allowing for ease of physical movement. The industrial end market is certainly vast, and there are many opportunities to leverage the benefit of composites. Composite tapes are reinforcing high-pressure pipes. They're being used for conveyor springs to replace more durable materials. And composites provide significant performance benefits in lifting slings. They can also be tailor-made to deliver strength and stiffness in specific directions or certain areas depending on use. Combined with being resistant to corrosion, chemical, and environmental exposures, there really is limitless possibilities in this end market. And our acquisition of FiberLine in 2019 expanded our solutions into the fiber optic cable and telecom industries. We've since been serving the 4G and more recently 5G infrastructure build-outs. The most recognized value of 5G simply is speed, but it's really about connectivity. 5G can power the development of smart cities, remote surgeries, and autonomous driving vehicles. Sustainability benefits like process automation, reduction of waste, and greater control over water management are also being enabled by this technology. Private wireless networks and manufacturing facilities and warehouses rely on 5G as well to meet the emerging technical requirements of AI, automation, and high-tech production. As you all know, China was an early mover in 5G infrastructure, with nearly 3 billion base stations and growing. In the U.S., with the upcoming deployment of funding from the BEAD program, it will greatly accelerate 5G and Avian is well positioned to take advantage. In the energy end market, there has been an increased focus around the world to improve the capacity and reliability of the energy grid, while also expanding more sustainable energy sources. We serve customers that support the traditional electrical infrastructure with components such as primary and secondary insulators, distribution and transmission poles, and cross arms. These updates often replace materials such as wood and steel. And for offshore wind farms, Dyneema ropes and mooring lines are considered the best option for positioning and anchoring windmills. For all modes of transportation, customers are looking to use composites to increase fuel efficiency and battery applications. Recent examples you may not be as familiar with include air cargo panels, rail car doors, and laminates to protect the underside of truck bed floors. And what I love about these applications is that they serve as perfect examples of how we have taken composites to these new and underserved markets I previously referenced. And winning new business in these areas has helped us to navigate the challenging market conditions that we find ourselves in this year. In that regard, our message today about Q2 and the remainder of the year is really about improving margins, offsetting weaker demand conditions. This is both from better mix and cost reductions. And Jamie's going to tell you more now, and then I'll have some concluding remarks.