Avient Corporation

Good morning, ladies and gentlemen, and welcome to the Aviant Corporation's webcast to discuss the company's third quarter 2025 results. My name is DeeDee, and I will be your operator for today. At this time, all participants are in 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 DiSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you, and good morning, 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. 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 forelooking statement. We encourage you to review our most recent reports, including our Form 10Q or any applicable amendments for a complete discussion of these factors or other risks 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 on the investor relations section of the Aviant website where the company describes the non-GAAP measures and provides a reconciliation 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 provided in today's press release, which is also available at aviant.com in the investor relations section. Joining me today is our Chairman 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 good morning, everyone. I am pleased to report third quarter adjusted EPS of 70 cents in line with our guidance, despite slightly weaker than anticipated sales. The subdued market demand in several of our key markets affected revenue growth compared against our strongest quarter in 2024, where we had realized 8.5% organic revenue growth in the third quarter last year. Our focus on increased productivity, cost containment, and portfolio prioritization helped expand adjusted EBITDA margins 60 basis points to 16.5%. This offset the slightly lower sales compared to the prior year third quarter to still grow adjusted earnings year over year. Strong operational performance resulted in adjusted EPS growth of 7.7% as reported and 4.5% excluding the impact of foreign currency translation. On a year-to-date basis, through the third quarter, our team's ability to execute in a tough and uncertain macro environment has resulted in 4.1% adjusted EPS growth on flat year-over-year sales. This earnings growth is attributable to favorable mix from consistent innovation-driven growth in healthcare and defense portfolios, as well as our ongoing productivity initiatives, which has year-to-date enabled 40 basis points of adjusted EBITDA margin expansion compared to last year. In our last two earnings calls, we have referenced our operational playbook for the current low demand, high uncertainty environment, which is primarily to focus on our customers and what we can influence in particular efficiency gains. As a result, we are on track to realize approximately $40 million of productivity benefits in 2025 versus last year. These benefits come from a combination of initiatives in sourcing, Lean Six Sigma, operations productivity, plant footprint optimization, and tight SG&A and discretionary spending control. Our team's execution has more than offset inflation, primarily from wages, as well as our investments in growth vectors that are critical for advancing our strategy. Additionally, we have been able to convert our profits into robust generation of cash, which is helping us to strengthen our balance sheet. General market conditions remain largely unchanged from August when we reported our second quarter results. This includes an uncertain global macro environment where customers in most markets and regions are waiting for clarity on trade policies, geopolitics is fast reshaping global businesses and supply chains, and the war in Europe continues. While the general market conditions are consistent with what we saw in the second quarter, There have been changes in certain end markets that affect customer demand. We want to provide some context around how things are playing out in our markets, especially versus our previous expectations. Consumer and packaging, which are our two largest markets, remain subdued in the third quarter. Packaging demand was lower than anticipated, especially in EMEA, our largest packaging market. Consumer sales were down five single digits in the third quarter. Notably, the weakness in consumer demand was broad-based globally. Following a weak Q2, we had expected continued negative growth in Q3, but the customer demand was weaker than what we had anticipated in Asia, where our consumer sales ended being down double digits for the quarter. Having said that, we did see some encouraging trends for our global consumer business in September, and while it is too early to call if it is inflecting to growth, we do expect year-over-year consumer sales performance to be better in the fourth quarter. Industrial and building and constructions have been in negative demand territory, and we don't see signs of a significant recovery in the fourth quarter. Energy, while a small percentage of the total company sales, was down much more than anticipated in Q3. The U.S. government's pause of Infrastructure Investment and Jobs Act funding to utilities in early 2025 has not fully resumed, impacting both grid modernization and green energy projects. Moreover, additional and changing tariffs, higher interest rates, as well as shortage of long lead time critical components for grid infrastructure is causing project delays and or changes. Our customers remain hopeful that this is a temporary situation and believe that the inventory levels at both utilities and distributors are once again in a healthy state. However, as a matter of caution, we have now modeled continued weak Q4 demand for our energy markets. We experienced some growth in transportation driven by incremental light vehicle production and an increase in demand for our Dyneema materials used in marine applications. In the fourth quarter, we expect flat to modest growth for this end market. As expected, defense, healthcare, and telecommunications remain resilient in Q3 with high single digit growth in all three markets. We expect these markets to continue to do well in Q4. Overall for Q4, we expect growth in our color, additives, and inks business to be under pressure due to the subdued market demand for packaging and consumer applications While our specialty engineering materials business is expected to grow, supported by customer demands and growth of some of our recently launched innovative products in healthcare and defense markets. Though we remain cautiously optimistic that end market demand will improve in the near future, there continue to be many unknowns and uncertainties surrounding our macro. Accordingly, we are proactively working on an action plan in the event that the slow or no growth period ensues for an extended period. This includes additional productivity actions and organizational complexity reduction so we can continue to grow our margins and earnings. I'll now hand the call to Jamie to cover our third quarter segment and regional performance, as well as provide some color on our updated guidance.