Avient Corporation

Good morning, ladies and gentlemen, and welcome to AVN Corporation's webcast to discuss the company's first quarter 2026 results. My name is Michelle, and I'll 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 like to turn the call over to Joe DiSalvo, Vice President, Treasurer, and Investor Relations. Please proceed.

Thank you, and good morning, everyone, to joining us on the call today. Before we begin, I'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 forward-looking statements. We encourage you to review our most recent reports, including our 10-K or 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 will use both GAAP and non-GAAP financial measures. Please refer to the presentation posted on 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 aviant.com in the investor relations section of the website. Joining me today is our Chairman, 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 good morning, everyone. Before I get into my business-related comments, I want to highlight the recent CFO leadership change we announced last week. Jamie Beggs has decided to leave Aviant, effective June 1, to pursue an opportunity outside of the company. I would like to extend my thanks to Jamie for her six years of contributions and service to Aviant and wish her the best in her new role. I am also very pleased to have Joe DiSalo take on the CFO role, who many of you know very well. I have had the chance to work closely with Joe for about two and a half years now and have established a strong and trusting relationship with him. Joe brings with him 25 years of financial experience, including nearly 15 years at Avian. He has established strong relationships within the company and with the investment community. His deep financial experience and consistent delivery of results make him well suited to lead our financial organization. I look forward to continuing to work closely with Joe to deliver value to all our stakeholders. Coming to the quarterly results now. In the first quarter, our teams delivered 83 cents of adjusted EPS modestly ahead of our expectations, demonstrating disciplined execution in a complex operating environment. Our focus on cash and debt reduction in 2025 also contributed favorably to our first quarter EPS growth. Sales were generally in line with expectations, and market demand was a continuation of Q4, especially in color additives and inks, the larger of our two business segments. Demand remains subdued in January and February, with a notable pickup in March as customers accelerated purchasing to mitigate potential supply disruptions and inflation pressures related to the conflict in the Middle East. Importantly, our continued focus on productivity and cost control more than offset wage inflation and incentive resets, expanding adjusted EBITDA margins by 20 basis points. One of the highlights of Q1 was that we started seeing some strength in our biggest end market of packaging, which contributes about 23% of our company revenues. Packaging finished up low single digits against strong comparisons of around 7% growth that we experienced in Q1 2025. We will talk more about packaging later in this presentation when we discuss our end markets in further detail. Geopolitical events in the Middle East have increased volatility in market conditions and customer purchasing behavior as customers work to secure supply and manage inflation. I have personally visited many of our customers in Asia and EMEA where the immediate supply chain disruptions are most pronounced. I can confidently say that our teams are doing an outstanding job to manage the situation proactively and are staying focused on and close to our customers. We are leveraging our global supply chain and material science capabilities to secure raw materials, qualify alternatives where we can, and have been implementing price actions where needed to offset inflation. This approach is consistent with our proven playbook, which enabled us to remain net price positive during the post-pandemic disruptions of 2021, 2022, and again during the tariff-driven volatility in 2025. In fact, We remain net price positive in each and every quarter during these volatile and uncertain periods and expect the same to be the case this year as we confront another extended period of elevated uncertainty. For the second quarter, we have secured supply for the vast majority of our raw materials. While availability remains constrained for select items, our teams are actively working with suppliers and seeking alternatives to minimize any impact which we expect to be immaterial for Q2. We also expect organic sales growth in both business segments and margin expansion for the total company in second quarter, while we continue to invest in the growth vectors in alignment with our strategy. Overall, our teams are well prepared to handle the changing business conditions with agility and staying focused on customers. Execution over the last nine quarters has been exceptional, And I believe our people are our competitive advantage in these turbulent times. While first half performance is tracking modestly ahead of our expectations, uncertainty around the second half remains elevated. As a result, we are currently not changing our full year guidance. We are prepared for a range of outcomes and are making decisions to proactively manage the business with what we can influence. Accordingly, We will continue to execute our productivity initiatives, as well as control spending and headcount, adjusting on an ongoing basis as the business conditions warrant. Turning to our end market trends. Packaging, our largest end market, continues to demonstrate resilience supported by new share gains, especially in food and beverage applications, and also by new product innovations. This includes brand new growth driven by non-PFAS polymer processing aids used in personal health and beauty applications, and low outgassing and anti-static materials used in films and tapes for electronics packaging applications. As a result, we expect mid to high single digit growth in packaging in the second quarter, led by EMEA, our largest packaging market, where we also have favorable comparisons versus the second quarter of 2025. Consumer sales declined in the first quarter. In the second quarter, we expect a return to low single-digit growth, primarily driven by favorable comparisons following the demand slowdown that began in the second quarter of 2025. Healthcare growth was low single-digit in the first quarter, reflecting tough double-digit growth comparisons from Q1 2025 and also some customer inventory rebalancing in the drug delivery space. Importantly, this market has delivered consistent growth over the past nine quarters with double-digit growth in each of the two years, 2024 and 2025. As we lap strong growth in the first half of 2025, we expect second quarter growth to be similar to the first quarter. Defense sales were flat in the first quarter caused by lumpiness and timing of orders delivery in this business. For Q2, we expect defense sales to grow sequentially over Q1 and also year over year versus a very strong Q2 2025 where defense had grown almost 20%. We see continued demand momentum in this business with healthy project pipelines and deep customer engagements in the United States and Europe. Building and construction was another bright spot where sales grew each of the three months of the first quarter and finished up mid single digits. The growth in the quarter was primarily driven by share gains in the commercial and data center infrastructure build applications. We expect the trend to continue in the second quarter. Demand in industrial transportation and energy market continues to be slow, with sales declining mid-single digits or so in each of these end markets in Q1. This trend is expected to continue into Q2, but with magnitude of decline being more modest. We have been highlighting our innovations in these calls on a fairly regular basis now to provide a flavor of how our strategic pillar of innovation is taking shape in the company and building momentum for sales growth and margin expansion. Even as we manage market volatility and deliver on our business performance each quarter, our strategy of prioritizing growth vectors tied to secular trends continues to create opportunities for innovation and new business creation at scale. Today, I will highlight how our teams are solving problems in the electronics and high performance computing space, which is one of our prioritized growth factors. As AI and high performance computing applications grow and pervade several industries, the demand for advanced semiconductors and efficient data centers continues to increase. We are supporting the AI and high performance computing infrastructure build out across three critical areas, bringing our technologies to industry leaders in this space. First, Avian's unique material solutions offer excellent microenvironment control in semiconductor fabs and are used in vapor handling applications such as front opening universal pods and carrier tapes for transporting bare dye and packaged chips. Our materials are designed to specifications of our customers while meeting stringent requirements of outgassing, electrostatic dissipation, and ultra clean processing. Second, in data center servers, increased demand in processing power requires connectors and other components to operate at higher temperatures and be packed into a smaller footprint, a challenge that is hard to address with traditional polymers. Our custom-designed solutions for advanced connectors and optical fiber components offer very high signal fidelity in order to maximize data throughput in AI server interconnects. Third, every data center needs thousands of miles of cabling, both for managing signal and power. With increasing power and density requirements, operators require cable solutions to be compact, quickly dissipate heat in high-density racks for safe operation, and meet stringent fire codes. Our materials offer thin-walled insulation that meet and exceed these needs as well as enable high-speed manufacturing of cables. Our electronics and high-performance computing solutions have been growing rapidly over the last couple of years, and we expect this momentum to continue in 2026 and beyond. This growth vector is expected to finish greater than $40 million in sales this year, adding about $10 million in sales just in 2026 itself, and doubling in sales in the last three years. Our teams continue to build and work on expanding the pipeline of projects and customers in this space. I will now hand the call over to Jamie to add some additional color on our first quarter results and 2026 financial guidance.