Avient Corporation

Good morning, ladies and gentlemen, and welcome to AVN Corporation's webcast to discuss the company's first quarter 2024 results. My name is Livia, and I'll be your operator for today. At this time, all participants are on listen-only mode. We will have question and answer session following the company's prepared remarks. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Joe DiSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you and good morning everyone to join 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 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 expectations and involve a number of business risks and uncertainties, any of which can cause actual results that differ materially from those expressed in or implied by the four looking statements. We encourage you to review our most recent reports, including our 10Q or any applicable amendments, for a complete discussion of these factors and other risk factors that may affect our future results. During the discussion today, the company will use both GAAP and non-GAAP financial measures. Please refer to the presentation in the investor relations section of the Aviant 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. A replay of this call will be available on our website. Information to access the replay is listed in today's press release, which is available at aviant.com in the investor relations section. Joining me today is our President and Chief Executive Officer, Dr. Ashish Kemper, and Senior Vice President and Chief Financial Officer, Jamie Beggs. I will now hand the call over to Ashish to begin.

Thanks, Joe, and good morning, everyone. I'm pleased to report that we started the year strong with first quarter adjusted EPS of 76 cents, reflecting an increase of 21% over the prior year quarter. This exceeds our first quarter guidance by 8 cents. Our improved performance was driven largely by additional sales and defense applications, as well as further raw material depletion. This was partially offset by lower sales in Europe. Later in the call today, Jamie will provide more details on our first quarter results and the positive revisions we are making to our 2024 full-year guidance. But first, I'll share some of my recent observations about our company and performance in the regions and markets we serve. Over the past two months, I have been traveling around the world, meeting with our employees, connecting with key customers, and touring our facilities. I have also had the opportunity to dig deep into regional market dynamics. In doing so, I learned firsthand from customers about their material science needs and opportunities. And I have held in-depth business reviews with our leaders in the United States, Europe, China, and Southeast Asia. I have done a lot of listening and probing and have been impressed with the quality of our leaders, the strategies serving local markets, and the feedback received from customers. It is also clear that consumer sentiment in each region is vastly different. And for this reason, we will spend some time this morning walking through demand trends to provide context on our results and outlook. We'll start with our largest region, US and Canada, which makes up 41% of overall sales. US and Canada grew 2% in the first quarter, driven by year-over-year growth in consumer, packaging, defense, industrial, and building and construction market segments. More than half of our sales in defense occur in the United States. These sales not only support military applications that protect soldiers from high-power rifle ammunition, but also local law enforcement, including Border Patrol and the Capitol Police. Award of additional defense customer programs exceeded our original estimates for the quarter. Offsetting the growth was a continued and significant destocking in the telecommunications space. Based on discussions with some of our key fiber customers in the telecom markets, it appears unlikely that we will see any meaningful rebound here until 2025. For EMEA, which represents 36% of our revenue, sales continue to be sluggish and were down 6% on a year-over-year basis for the first quarter. Consumer confidence remains weak there, and Eurozone manufacturing PMI continues to signal contraction. On the positive side, we are seeing encouraging signs in packaging and healthcare as we enter the second quarter. Within the quarter, sales for defense and healthcare applications grew. For defense, ongoing geopolitical situations, as well as the recent addition of Nordic countries to NATO, has increased demand for vests and helmets for ballistic protection. In healthcare, there is positive momentum in drug delivery devices, which allowed us to grow year over year in that region. Auto injectors continue to gain momentum, and we have partnered with key pharmaceutical companies in this space to meet the growing demand. Looking forward, the second quarter has started off slightly better in Europe. Easing of inflation and lower interest rates will be important contributors to freeing up household income for food, beverage, and other consumable goods as we progress through the year. Let's move to Asia, which represents 18% of our sales. The region is undergoing tremendous change as China transitions to focusing on its domestic economy. The fiscal stimulus by the Chinese government continues, but the visibility into its impact is still unclear. Approximately 60% of our Asia sales are in China, and 70% of what we do today within China serves local markets. This positions us well to grow, especially when the consumer is incentivized to spend more. With that being said, our sales in China grew 6% within the quarter, driven by strength in industrial and healthcare end markets. This was offset by lower packaging sales in remaining Asia. Overall, total sales in Asia were flat in the first quarter, excluding the impact of foreign exchange. Putting it all together for the entire company, organic sales were down 1.5% for the quarter. We do see demand conditions generally improving across all regions, but there is some variation in how overall end markets are trending. Telecommunications and energy remain the weaker end markets, with first quarter year over year sales down double digits and weakness continuing into the second quarter. However, We are seeing reasonably good demand year over year with improved momentum in consumer, packaging, defense, healthcare, and industrial end markets. With that, I will now hand it off to Jamie, who will provide more detail on our first quarter results and an update on our 2024 outlook.