Sign in
AC

AVIENT CORP (AVNT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 delivered 4% YoY sales growth to $746.5M with adjusted EPS of $0.49, landing within guidance and modestly above the midpoint; GAAP EPS ($0.52) exceeded adjusted EPS due to insurance reimbursement-related special items (+$0.20 EPS) .
  • Sequentially, sales and margins stepped down from Q3 on seasonality and a $10M variable compensation reset plus ~$2M FX headwind; SEM outperformed with mix/pricing while CAI faced flat raws and comp reset .
  • 2025 outlook: Q1 adjusted EPS $0.76 (in line YoY; -$0.04 FX headwind); FY adjusted EBITDA $540–$570M and adjusted EPS $2.70–$2.94 (midpoint implies ~11% growth ex-FX with a -$0.12 FX headwind) .
  • Strategic catalysts: Dyneema Gen-3 launch for defense/law enforcement (lighter, higher ballistic performance) and targeted innovation focus; ERP (S/4HANA) program halted with Q1’25 special charges, shifting to lower-cost digital tools .
  • Dividend maintained at $0.27/sh (declared Feb 10, payable Apr 4), continuing the 14-year dividend growth streak referenced earlier in Q4 commentary .

What Went Well and What Went Wrong

  • What Went Well
    • SEM momentum: SEM grew sales 8% and EBITDA 13% ex-FX with favorable mix/pricing (net +$3M), driving margin expansion .
    • Regional breadth and healthcare: Organic growth in all regions; health care posted double-digit growth in 2024 and Q4 with wins in CGM devices, injector pens, and remote monitoring .
    • Innovation catalyst: Dyneema HB330/HB332 launch offers up to 45% lighter law-enforcement systems and ~20% weight savings for military armor, supporting share gains and margin mix .
  • What Went Wrong
    • Variable comp reset and FX: Q4 adjusted EBITDA/EPS down slightly YoY as a $10M comp reset and ~$2M EBITDA FX headwind offset higher sales; EPS also had a ~$0.01 FX drag .
    • CAI softness vs prior quarter: CAI lacked prior-quarter raw material tailwinds, and transportation end-market was weaker in U.S./Europe, leading to EBITDA decline YoY for the segment .
    • Macro/FX uncertainty into 2025: Management highlighted policy, inflation, rates, tariffs and FX as sources of a wider outcomes range; ~60% non-U.S. sales magnifies FX exposure (2025 EPS headwind estimated at ~$0.12) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Sales ($USD Millions)$849.7 $815.2 $746.5
GAAP Diluted EPS (Cont. Ops)$0.36 $0.41 $0.52
Adjusted EPS$0.76 $0.65 $0.49
Adjusted EBITDA ($USD Millions)$143.3 $130.0 $110.0
Adjusted EBITDA Margin %16.9% 15.9% 14.7%
Adjusted Gross Margin %32.9% 32.1% 31.6%

Segment performance (sales and EBITDA):

Segment KPI ($USD Millions)Q2 2024Q3 2024Q4 2024
CAI Sales$542.0 $521.5 $467.7
SEM Sales$308.1 $294.6 $279.7
CAI EBITDA$107.9 $97.4 $81.7
SEM EBITDA$63.6 $57.1 $55.6

KPIs vs company guidance:

KPIQ2 2024Q3 2024Q4 2024
Adjusted EPS – Company Guidance$0.71 (target) $0.62 (target) $0.46–$0.50 (range)
Adjusted EPS – Actual$0.76 $0.65 $0.49

Non-GAAP adjustments and impact:

  • Special items (Q4): after-tax +$0.20 EPS; GAAP net income benefited from $34.7M reimbursement of previously incurred environmental costs (reducing adjusted figures vs GAAP) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSQ1 2025N/A$0.76; includes -$0.04 FX headwind New/in-line YoY
Adjusted EBITDAFY 2025N/A$540–$570M New
Adjusted EPSFY 2025N/A$2.70–$2.94; midpoint +11% ex-FX; -$0.12 FX headwind New
Free Cash FlowFY 2025N/A$180–$200M New
Capital ExpendituresFY 2025N/A~$120M (may vary by growth funding) New
DividendNext paymentN/A$0.27/sh payable Apr 4, 2025 Maintained quarterly rate

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2–Q3 2024)Current Period (Q4 2024)Trend
Defense/DyneemaDefense cited as strong in EMEA; composites supporting building/construction; Investor Day on growth vectors upcoming .Dyneema Gen-3 launched (HB330/HB332), up to 45% lighter LE systems and ~20% weight savings for military; defense growth lumpy (outsized Q1’24); 2025 base case mid-single-digit growth .Positive innovation; demand lumpy
HealthcarePackaging/consumer drove growth; health care not explicitly highlighted in Q2 press .Double-digit healthcare growth in 2024/Q4; wins in CGM, injector pens, remote monitoring .Improving
Europe (EMEA)Q3 EMEA +5% organic; defense strong .Positive organic growth for 3 straight quarters; 2025 GDP outlook better than 2024 .Stabilizing/improving
FX/Tariffs/MacroQ2/Q3: guidance framed with macro/FX sensitivity .~60% revenue ex-U.S.; 2025 FX headwind ~$0.12 EPS and ~$15M EBITDA; tariff exposure limited (<5% direct RM) but macro-demand impact uncertain .Cautious headwind
ERP/DigitalQ2 noted S/4HANA as part of risk factors .S/4HANA halted; Q1’25 special charges (~$71M impairment + ~$15M license) with pivot to targeted ML/AI tools for price/inventory/SC visibility .Strategic pivot
China/Auto/AI servers—China +7% in Q4; strong transportation in China (~20% YoY), EV mid-single-digit volume; exposure to digital economy/servers (AI) .Select growth pockets

Management Commentary

  • “Organic sales grew in all geographic regions with the U.S. and Canada growing at 6%, EMEA at 1%, Asia at 7% and Latin America at 14%.”
  • “Our best full year forecast…is an adjusted EBITDA range of $540 to $570 million and adjusted EPS range of $2.70 to $2.94. The mid-point…represents 11% growth, excluding the unfavorable impact from foreign exchange of $0.12 for the full year.”
  • On Dyneema Gen-3: “Up to 45% lighter…for law enforcement…upwards of 20% weight savings…for military hard armor…proprietary and revolutionary innovation.”
  • On Q4 headwinds: “Rapid strengthening of the U.S. dollar unfavorably affected EBITDA by $2 million and EPS by $0.01…variable compensation reset…negatively impacted…by $10 million and $0.08, respectively.”
  • On ERP decision: “We decided to cease all work related to…S/4HANA…risk, complexity, time and associated costs…have substantially increased…alternative solutions…less costly, easier to implement and can deliver substantially the same benefits.”

Q&A Highlights

  • Defense growth and Dyneema: 2025 defense base case is mid-single-digit growth after a 14% 2024 comp; Dyneema innovation supports margin mix and competitive moat, with commercialization across personal and vehicle armor .
  • FX and macro: 2025 FX headwind estimated at ~$0.12 EPS and ~$15M EBITDA; limited direct tariff exposure (<5% RM) but demand elasticity uncertain, prompting cautious guide ranges .
  • Europe outlook: EMEA has posted three consecutive quarters of positive organic growth; 2025 GDP setup better than 2024 .
  • Healthcare momentum: Double-digit growth with new wins in CGM, injector pens and remote monitoring across regions .
  • Free cash flow and capex: 2025 FCF targeted at $180–$200M; capex around ~$120M with flexibility to fund growth vectors; ERP pause provides some capex avoidance .

Estimates Context

  • Street consensus (S&P Global) for Q4’24 EPS and revenue could not be retrieved at time of analysis due to a data access limit. As a result, “vs. estimates” comparisons are not included and will be updated when S&P Global data becomes available.*
Metric (Q4 2024)S&P Global ConsensusActualBeat/Miss
EPS (Adjusted)N/A$0.49 N/A
Revenue ($M)N/A$746.5 N/A

*S&P Global consensus data unavailable during analysis window.

Key Takeaways for Investors

  • Quality of print: In-line quarter within guidance; GAAP/adjusted spread driven by environmental insurance recovery; watch for normalization of special items in 2025 .
  • Mix tailwinds: SEM mix/pricing strength and Dyneema Gen-3 commercialization create medium-term margin support even as CAI contends with uneven transport end markets .
  • 2025 setup: Midpoint guides imply EBITDA/EPS growth despite FX; cadence may be back-end weighted given lumpy defense comps and FX headwinds in H1 .
  • FX sensitivity: With ~60% non-U.S. sales, USD strength is a visible headwind; mitigation (local-for-local, sourcing shifts) reduces tariff exposure but not demand elasticity risk .
  • Capital allocation: Dividend maintained; capex disciplined around growth vectors; ERP pivot should free resources while accelerating targeted digital enablement .
  • Watch list: Defense order timing (especially Q1 comp), healthcare wins durability, European demand trend, raws/pricing balance in CAI, and FX trajectory relative to guide assumptions .