Avient Corporation

Good morning, ladies and gentlemen, and welcome to IVN Corporation's webcast to discuss the company's fourth quarter and full year 2024 results. My name is Michelle, 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 like now to turn the call over to Joe DeSavo, Vice President, Treasurer and Investor Relations. Please go ahead.

Thank you and good morning to everyone joining us on the call today. Before we begin, 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. Forelooking statements will give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management's expectations 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 forelooking statements. We encourage you to review our most recent SEC filings and any applicable amendments for 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 posted in the investor relations section of the Avian website where the company describes the 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 avian.com in the investor relations section. Joining me today is our President and Chief Executive Officer, Dr. Ashish Kamper, 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 good morning, everyone. 2024 was my first full year as CEO of Aviant and an important year of change for our company. Over the course of the year, we developed and launched a new strategy to deliver and accelerate organic growth. As part of our evolution as a company, we articulated a new purpose, which is to be an innovator of material solutions to help our customers succeed while enabling a sustainable world. Our strategic approach is to intersect secular trends and high growth markets with our technologies to create product platforms of scale. We have conducted extensive portfolio prioritization and identified growth vectors to both catalyze growth in our core and to build businesses in high growth markets supported by secular trends. As we began deploying our new strategy, it was important that we also remain focused on delivering performance in the present. Our overarching objective is organic top line growth with margin expansion on the bottom line. I'm very pleased to report that in 2024, we delivered both. On this slide, we present organic revenue growth by region, which removes the impact of FX for the full year 2024. As you can see, we grew organically in every region of the world, including EMEA, where the macro environment was quite challenging. We also realized significantly higher growth versus respective regional GDP for the US and Canada, Asia, and Latin America regions. This was driven by our enhanced focus on customers, share gains, winning new product specifications, and restocking in certain end markets. Some of our key highlights for full year 2024 are shown in this next slide. Organic sales for the total company increased by 4%. Both our business segments grew, and both expanded adjusted EBITDA margins. Organic sales growth was 3% for color, additives, and inks, or CAI segment, and 6% for specialty engineered materials, or SEM segment. Adjusted EBITDA margin expansions were 90 basis points and 110 basis points for CAI and SEM segments, respectively. For the company, our adjusted EBITDA margins expanded 20 basis points to 16.2%. Operationally, we remained disciplined and leveraged our top-line growth to deliver 13% adjusted EPS growth for the year, which includes the impact of FX. In December, at our investor day in New York, we shared our new company purpose and strategy, which has already been under execution for some time. We strengthened our leadership team with new appointments for the CTO, CIO, General Counsel, and SVP of new business development and marketing excellence roles. Since then, in early January this year, we have rolled out a new incentive compensation plan for the company to ensure there is a direct alignment between executing our strategy and how and where our employees are focused. And culturally, like every year, we strive for continuous improvement. That starts with safety. I'm proud to share that 2024 was a record year for safety for us. And our injury incident rate was the best in the company's history. That being said, Our ultimate and ongoing goal remains zero injuries, so we will continue to be disciplined and focused on further improving our safety performance. One last point I would like to highlight for the year is our 5% dividend increase. That increase marked the 14th consecutive year of annual dividend growth for Avian. At the investor day in December, we also shared our prioritized growth vectors. One of our identified growth vectors is composites for defense and law enforcement to catalyze growth in our core business of advanced protective materials. The market need for lighter and better protection materials is driving strong innovation in our labs and manufacturing processes. Today, I will highlight a new innovation in our Dyneema portfolio that is used in military and law enforcement applications. As you may know, Dyneema is the world's strongest fiber, and we just announced a breakthrough launch of our third generation technology of this product line under Dyneema HB330 and HB332. This innovation offers industry leading performance through unmatched ballistic protection that is able to stop high velocity threats with precision. It has outstanding thermal performance and retains its stiffness and properties in high temperature environments. And its ultralight strength delivers the lightest possible solution for hard ballistics applications without compromising protection. For law enforcement, this innovation will enable a high performance system that is up to 45% lighter than current solutions in use. For military personnel, it will enable upwards of 20% wage savings when compared to current materials that have been incorporated into military hard armor contracts. The lightweight strength of Dyneema enhances agility, comfort, and overall mission effectiveness for those who protect and serve. This proprietary and revolutionary innovation will be used by our customers for both personal armor and vehicle armor. Before I turn the call over to Jamie, I would like to comment on a significant decision we have recently made in the first quarter this year. We decided to seize all work related to the implementation of S4 HANA, a cloud-based ERP system, which we had begun some time ago. The decision was based on the risk, complexity, time, and associated costs, all of which have substantially increased to complete the project. Accordingly, the initial value proposition of the project no longer holds true. Further, we have determined that there are alternative solutions less than a global ERP system that are less costly, easier to implement, and can deliver substantially the same benefits, which will ultimately deliver better returns for our shareholders. As a result of this decision, the company will recognize a non-cash impairment charge of approximately $71 million associated with capitalized implementation costs and a charge of approximately $15 million associated with contractual obligations for license fees in the first quarter of 2025. These charges will be considered special items and are not included in our adjusted 2025 projections. I want to reassure our investors that we don't take such decisions lightly, but I fully believe it is the right one going forward for the company and our shareholders. With that, Jamie can provide more context on 2024 and outlook for the year ahead.