Avient Corporation

Good morning, ladies and gentlemen, and welcome to Aviant Corporation's webcast to discuss the company's second quarter 2024 results. My name is Shannon, and I will 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 like to turn the call over to Joe DeSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you, 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 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 cause actual results to differ materially from those expressed in or implied by the forward-looking statements. We encourage you to refer to our most recent reports, including our 10-Q and any applicable amendments, for a complete discussion of these factors and other risks that may affect our future results. During the discussion today, the company used both U.S. GAAP and non-GAAP financial measures. Please refer to the presentation posted in the investor section of the Aviant website where the company describes non-GAAP measures and provides a reconciliation for historical non-GAAP financial measures through their most directly comparable GAAP financial measures. A replay of this call will be available on the 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 Kanpur, and Senior Vice President and Chief Financial Officer, Jamie Beggs. I will now hand the call over to Ashish to begin.

Thank you, Joe, and welcome, everyone. I'm very pleased with our second quarter financial performance, which builds upon our strong post-quarter results. As I have said on previous calls, one of our main areas of focus is to deliver organic top-line growth with margin expansion, and this quarter we achieved both. Starting with the top line, we delivered sales of $850 million for the quarter, representing 3% growth over the second quarter of 2023, on an as-reported basis. Sales, however, grew 5% on an organic basis, which excludes the impact of foreign exchange. This is particularly noteworthy because it has been seven quarters since the last time the company delivered sales growth. The organic revenue growth was broad-based across all geographies and in both of our business segments, color additives and inks, and specialty engineering materials. Both segments benefited from gaining share, winning new product specifications, and inventory restocking in certain end markets. Our team's ability to grow revenue, control costs, and operate efficiently, as well as raw material deflation, helped us expand adjusted EBITDA margins to 16.9%. That's 100 basis points improvement versus the prior year, second quarter. This all led to adjusted earnings per share of 76 cents, which is a 21% increase versus the prior year and exceeded our prior guidance for the quarter by 5 cents. Our better than expected performance was primarily driven by the color, additives, and ink segment, which benefited from slightly better demand as well as favorable raw material costs. From an end market perspective, Growth in packaging and consumer had the greatest impact on the quarter by growing 8% and 10% respectively. These are two of our largest end markets, and both benefited from some restocking, particularly in Europe. We also had strong growth in building and construction and healthcare. This was primarily due to new product specifications and gaining share to deliver above-market growth. While macro indicators for building and construction remain somewhat weak, both the SEM and color segment in the U.S. and Canada gained share and won new business. On previous earnings calls, we have noted that healthcare destocking was lagging other end markets. I am pleased to report that we began to see a meaningful improvement in order patterns during the second quarter and grew healthcare sales 10% on a year-over-year basis. Not only do we believe this talking has run its course, we are well positioned to capitalize in certain medical applications that are currently on trend, most notably in areas of drug delivery and monitoring devices. We have strategically partnered with key pharmaceutical companies and OEMs developing these devices, and we are growing with them as they benefit from strong underlying demand. In the defense end market, Demand has been driven by overseas conflicts and specific NATO programs. Our second quarter sales were up modestly over the five-year second quarter, and we continue to expect full-year sales growth to be in the low double digits. Telecommunication and energy, which together constitute 7% of our sales, remain the more challenged end markets, with sales down double digits in the second quarter. The telecommunications end market is primarily impacted by destocking in the U.S. and continued weak demand in Europe. As we start the third quarter, U.S. demand, which accounts for more than 60% of our sales, is improving, and we expect overall telecommunications sales to return to modest growth in the second half of the year. It is a similar story in the energy end market, where customers have been managing down inventory levels in the first half of the year. We see improving trends as we start the third quarter, in particular for applications designed to harden the electrical transmission grid. Our composites business provides innovative materials in applications such as cross-arms and insulator rods, which play an important role in ensuring the reliability of the grid in a sustainable manner. We expect the broad category of energy to grow in importance over time, and we will continue to focus on developing innovative solutions in this space. I will now hand it off to Jamie to discuss our second quarter results in more detail and to provide an update on our 2024 outlook.