Avient Reports Q3 2026 Results and Raises Full-Year Guidance

Avient (NYSE: AVNT ) reported third-quarter financial results on Wednesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Avient Corporation reported a strong third quarter 2026 with adjusted EPS of $0.86, surpassing expectations by $0.06, and a 10.6% year-over-year increase in organic sales. The company raised its full-year guidance for adjusted EPS, EBITDA, and free cash flow, reflecting confidence despite macroeconomic uncertainties. Key strategic focuses include accelerating innovation translation into profitable growth, optimizing supply chain efficiency, and enhancing cross-segment collaboration.

Operational highlights include a 16% growth in adjusted EBITDA and a 23% increase in adjusted EPS over the previous year, driven by strong performance in healthcare, packaging, and defense markets. Avient repaid $50 million of debt in the third quarter, with plans to balance future capital deployment between debt reduction and share repurchases. Management emphasized maintaining productivity and cost discipline while focusing on long-term shareholder value through strategic capital allocation and growth initiatives.

Full Transcript Kevin (Operator) Good morning, ladies and gentlemen, and welcome to the Avient Corporation's webcast to discuss the company's third quarter 2026 results. My name is Kevin, and I'll be your operator 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 call is being recorded for replay purposes. I would now like to turn the call over to George Clark, Director of Investor Relations at Avient. George Clark (Director of Investor Relations) Thank you, and good morning to everyone joining us on the call today. Before we begin, we would 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 give current expectations or forecasts of future events and are not guarantees of future performance. They're 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 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 in the Investor Relations section of the Avient 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 avient.com in the Investor Relations section. Joining me on the call today is our President and Chief Executive Officer, Mike Frank, and Joe DeSalvo, Senior Vice President, Chief Financial Officer.

I will now hand the call over to Mike to begin. Mike Frank (President and Chief Executive Officer) Thank you, George, and good morning, everyone. I want to start by saying thank you to the global Avient team for welcoming me to the company and to the Board for their trust and support. I'm truly honored to join Avient, and as I've gotten to know the company, my excitement for the value we can create has only grown.

It really comes down to four key themes: the people, the business, innovation, and the opportunity ahead for Avient. I'll start with the people because they are truly the core of what determines a company's success. In my brief time with Avient, I've been struck by the focus on and the passion for the customer and on innovation that permeates across the entire organization. In addition, it's clear to me that we have a strong leadership team that's focused on the strategy and our purpose.

Over the past few weeks, I've met with several of our stakeholders, including employees at both our headquarters and operating sites, customers, suppliers, and investors. I came away impressed and excited by the opportunity that lies ahead. We are delivering today with a strategy that is working, but I also believe we have the opportunity to do even more. Of course, I'm also excited about the business itself and the markets we serve.

Avient's diverse portfolio of technologies sits at the intersection of several powerful secular trends, including healthcare, personal safety and protection, lightweighting, electronics, and others. These trends are creating significant opportunities for innovative material solutions and position us well to compete and deliver sustainable organic growth over time. The world is demanding that materials do more, and innovation is the thread that connects all these opportunities, and it's one of Avient's core strengths.

By combining deep technical and regulatory expertise with close customer collaboration, we are creating solutions that strengthen our market positions, expand our addressable opportunities, and generate durable growth. It's only been three weeks, but it's clear to me that we have a strong organization, a differentiated portfolio of technologies, exposure to attractive growth markets, and a proven ability to innovate. The strategy is sound, the disciplined execution by our operating segments is strong, and the opportunity ahead of us is significant, as evidenced by our third quarter results and updated outlook.

The third quarter reflected broad-based strength across the business, with results exceeding expectations and demonstrating the continued effectiveness of the company's strategy. Adjusted EPS of $0.86 came in $0.06 ahead of expectation, and total company organic sales increased 10.6% year over year. Our focus on profitable growth, along with the benefit from productivity initiatives, increased adjusted EBITDA margins by 80 basis points over the prior year to a third-quarter record of 17.3%.

Given the healthy performance through the first three quarters, we are raising our full-year adjusted EPS, adjusted EBITDA, and free cash flow outlook at the midpoint, reflecting our confidence amidst ongoing macroeconomic uncertainty. Joe will cover all the details in the later slides. From these business results, it's clear we have momentum, and before I comment on my initial impressions and opportunities, allow me to provide some context on the mandate I received from our Board. This is not a turnaround story, and the Board believes our strategy is well defined.

However, they also believe we have opportunities to accelerate the growth trajectory of our business, which is core to my mandate. Again, it's early days, but let me provide three examples of where I see opportunities to start to unlock more value. Firstly, we need to accelerate the translation of innovation into profitable growth. We have strong innovation capabilities, and we need to find ways to scale our unique technologies across our customer base more quickly.

For example, we've innovated some incredible material science solutions for a medical device company, but we're scaling it sequentially instead of simultaneously. Secondly, our customers are looking for us to bring them solutions to the big challenges they are trying to solve. This is an opportunity to enhance how we approach market segments in a holistic manner. I have seen some instances when we approach opportunities through the lens of a single technology, business, or individual customer.

By strengthening our collaboration between our two segments, I believe we can better leverage the breadth of our portfolio. And lastly, we have real opportunity to optimize our end-to-end supply chain. I'm taking a fresh look at our operations, including our manufacturing footprint, our product portfolio, and how we go to market. This effort will help us optimize our cost to serve and expand our opportunities for profitable growth in some of our more mature markets.

Ultimately, this will not only help to boost growth but also aid in improving margins as plant utilization increases and complexity decreases. All of that said, we will not sacrifice the progress we've made on margin expansion to drive growth, and we are committed to maintaining our focus on productivity and cost discipline. Strong free cash flow will be a meaningful measure of success, reflecting our ability to efficiently convert earnings into cash to provide greater financial flexibility and enhance returns. That brings me to our capital allocation priorities.

First and foremost, we will continue investing in the business to support organic growth and strengthen our competitive position. Second, we will remain committed to returning capital to shareholders, including through our dividend. Beyond those priorities, we will take a balanced and disciplined approach to deploying excess cash, evaluating opportunities to reduce debt, repurchase shares, or pursue other value-enhancing investments. Our objective is to allocate capital in a manner that maximizes long-term shareholder value while maintaining the financial flexibility to support future growth opportunities.

As such, in the near term, the key metrics I will be focusing on will be profitable sales growth, adjusted EBITDA margins, and free cash flow. Avient is a company with a clear purpose, a strong foundation, and a strategy that's delivering results, and I see opportunities to help accelerate that strategy. I see a company with attractive positions in our core markets and growth vectors, differentiated technologies, deep customer relationships with market leaders, and a talented team that understands how to execute.

My objective is to help unlock even more of that potential, increase the pace of execution, and ensure that we're fully capitalizing on the opportunities in front of us to materialize a brighter future. With that, I will turn the call over to Joe to discuss our third quarter financial results in more detail. Go ahead, Joe. Joe DeSalvo (Chief Financial Officer) Thank you, Mike, and good morning, everyone.

I want to reinforce Mike's comments on our strategic framework. Our teams bring this strategy to life every day, and it continues to deliver results. Our fundamentals are sound, and we are seeing meaningful opportunities to build on this foundation and the momentum we have. In the third quarter, we delivered $0.86 of adjusted EPS, $0.06 ahead of expectations, driven by better-than-expected sales in the Color, Additives & Inks segment, primarily in the packaging, healthcare, and building and construction markets.

Total company year-over-year organic sales growth of 10.6% during the third quarter was supported by pricing, new business wins, and robust demand for our growth vectors, which led to favorable mix and overall volume growth. Total volume growth was approximately 1% in the quarter, with price and mix contributing the balance of the organic growth. The considerable mix benefit during the quarter was driven by growth in functional additives such as our chemical foaming agents and barrier technologies.

Chemical foaming agents improve lightweighting while enhancing material performance in the building and construction market, and barrier additives are primarily used in food and beverage packaging to extend shelf life. While volume growth may appear modest, we are selling more value-added, differentiated products, leading to profitable sales growth. This, and our continued focus on company-wide productivity initiatives, helped expand total company adjusted EBITDA margins by 80 basis points year over year to 17.3%. Higher sales and margin expansion led to adjusted EBITDA growth of 16% and adjusted EPS growth of 23% over the prior year.

Healthy cash flow generation in the quarter enabled debt paydown of $50 million, further strengthening the balance sheet. As seen through the September year-to-date results shown on the right-hand side of the slide, our strategy continues to deliver tangible results. We delivered 4% organic sales growth and 70 basis points of adjusted EBITDA margin expansion. This translated into 8% adjusted EBITDA growth and 13% adjusted EPS growth, excluding the impact of foreign currency translation.

Our momentum was broad-based this quarter, with both segments in every region contributing to growth. Shifting to our segment results, our Color, Additives & Inks segment delivered another strong quarter, generating 8% organic sales growth and 15% EBITDA growth, with all regions and end markets contributing. Sales growth was driven by pricing to offset inflation as well as favorable mix from demand for functional additives. New business wins through our key account strategy are also delivering results in packaging and consumer applications, particularly in Asia and Latin America.

In the US and Canada, building and construction grew double digits, driven by demand for applications supporting commercial infrastructure investment. Operating leverage from higher sales and productivity actions offset inflation and higher variable compensation, leading to 120 basis points of EBITDA margin expansion. EBITDA margins of 20.1% for the segment. Our Specialty Engineered Materials segment organic sales grew 15% in the quarter, with eight out of nine end markets contributing to the year-over-year sales growth.

The segment's two largest markets, defense and consumer, accounting for over one third of the segment's sales, grew double digits in the quarter. Demand for defense continues to be supported by increased spending by military and law enforcement agencies. Sales growth in the consumer end market is driven by new business gains and favorable year over year. Demand for recreational equipment, packaging, and telecommunication, particularly in Asia, continue to benefit from demand for our technology used in high performance computing and electronics, delivering double-digit growth.

Applications supporting commercial infrastructure investments in building, construction, energy, and telecom also grew double digits, and I'm pleased to report that healthcare sales in the Specialty Engineered Materials segment returned to double-digit growth in the third quarter. As we highlighted in our last two earnings calls, we are experiencing some rebalancing of inventory levels by our customers, especially for drug delivery and remote monitoring devices. While this dynamic weighed on first-half healthcare sales, the underlying demand and secular trends supporting growth remain intact.

Our teams continue to build on a solid project pipeline, working closely with leading pharmaceutical as well as medical device and equipment companies. This broad-based demand led to the segment's strong organic sales growth of 15%. Higher sales combined with productivity initiatives resulted in EBITDA margin expansion of 140 basis points to 21.3% for the segment. In the third quarter, every region delivered organic sales growth.

Pricing actions to offset raw material inflation were a tailwind for all regions, with volume growth contributing in Asia, the US and Canada, and Latin America. Organic sales growth in EMEA was muted relative to the other regions due to weaker demand for several end markets, including consumer, industrial, and transportation. Asia grew 20% year over year following 18% growth in the second quarter. With both operating segments delivering double-digit growth, Asia continues to exemplify our strategy in action.

Our key accounts approach is enabling us to win with local customers, while our innovative technologies position us to continue to benefit from secular growth in high performance computing electronics. With this backdrop, I will now cover our updated financial outlook for 2026. We are raising our full-year guidance range for adjusted EPS and raising the low end of our range for adjusted EBITDA and adjusted free cash flow. We now expect adjusted EBITDA to be in the range of 593 million to 603 million, adjusted EPS to be in the range of $3.22 to $3.32, and adjusted free cash flow to be in the range of $215 million to $230 million.

Our outlook accounts for continued macroeconomic uncertainty, including demand pressures related to persistent inflation and higher interest rates. Despite these factors, we remain confident in our execution, and momentum through three quarters will enable us to deliver a strong finish to 2026. We have also updated our full-year capital expenditure outlook to approximately 120 million. At this updated level, capital expenditures are expected to be above the 107 million invested in 2025, driven by strategic growth investments.

Our healthy cash flow generation continues to support balance sheet improvement. During the third quarter, we repaid another $50 million of debt, bringing our total debt reduction over the last 18 months to $250 million. Our expectation for net leverage is to exit 2026 in the range of 2.2 to 2.3 times, compared to 2.6 times at the end of 2025. Going forward, I expect we will take a balanced approach to deploying excess cash for further debt reduction and opportunistic share repurchases.

To that end, to date in the fourth quarter we have repurchased 281,000 shares for approximately $10.9 million. This is the first share buyback activity since 2022 and represents a notable shift in our capital allocation strategy. With that, we will now open the line for Q&A. Kevin (Operator) Thank you, ladies and gentlemen.