10q10k10q10k.net

What changed in AVIENT CORP's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of AVIENT CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+175 added−199 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-22)

Top changes in AVIENT CORP's 2023 10-K

175 paragraphs added · 199 removed · 143 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+5 added−10 removed30 unchanged
Biggest changePolymers are a class of organic materials that are generally produced by converting natural gas or crude oil derivatives into monomers, such as ethylene, propylene, and styrene. These monomers are then polymerized into chains called polymers, or plastic resin, such as polyethylene and polypropylene, in their most basic forms. Avient does not produce commodity base resins.
Biggest changeThese monomers are then polymerized into chains called polymers, or plastic resin, such as polyethylene and polypropylene, in their most basic forms. Avient does not produce commodity base resins. Rather, Avient sources various resins, polymers and additives, then employs additional chemistry in formulating those materials into highly engineered, unique materials for a specific use.
ITEM 1. BUSINESS Business Overview We are a premier formulator of specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Our products include specialty engineered materials, performance fibers, advanced composites and color and additive systems.
ITEM 1. BUSINESS Business Overview We are a premier formulator of specialized and sustainable materials solutions that transform customer challenges into opportunities, bringing new products to life for a better world. Our products include specialty engineered materials, performance fibers, advanced composites and color and additive systems.
Training and Development We provide meaningful learning engagements and skill development opportunities to all full- and part-time global associates. Learning is ingrained in our culture and every Avient associate participates in training annually. We manage training and development through global programs and technology, to ensure a consistent and high-quality experience for associates.
Training and Development We provide meaningful learning engagements and skill development opportunities to all full- and part-time global associates. Learning is ingrained in our culture and every Avient associate participates in training annually. We manage training and development through global programs and technology, to provide a consistent and high-quality experience for associates.
Environmental, Health and Safety and Other Regulation We are subject to various environmental laws and regulations that apply to the production, use and sale of chemicals, emissions into the air, discharges into waterways and other releases of materials into the environment, and the generation, handling, storage, transportation, treatment and disposal of waste material.
Environmental, Health and Safety and Other Regulation We are subject to various environmental laws and regulations that apply to the production, use and sale of chemicals, emissions into the air, discharges into waterways and other releases of materials into the environment, and the generation, handling, storage, transportation, treatment and disposal of waste materials.
We believe that our role in the value chain continues to become more vital as our customers increasingly need reliable suppliers with a global reach and increasingly effective material-based solutions to improve their products' sustainability appeal, performance, differentiation, profitability and competitive advantage.
We believe that our role in the value chain continues to become more vital as our customers increasingly need reliable suppliers with a global reach and increasingly effective materials-based solutions to improve their products' sustainability appeal, performance, differentiation, profitability and competitive advantage.
Research and Development We have substantial technology and development capabilities, powered by approximately 1,100 associates serving in technology capacities, approximately 110 of whom have PhD level educations. Our efforts are largely devoted to developing new product formulations to address evolving market and sustainability needs.
Research and Development We have substantial technology and development capabilities, powered by approximately 1,100 associates serving in technology capacities, approximately 140 of whom have PhD level educations. Our efforts are largely devoted to developing new product formulations to address evolving market and sustainability needs.
We do this by providing quality technical services to evaluate alternative raw materials, assuring the continued success of our products for customer applications, providing technology to improve our products, processes and applications and providing support to our manufacturing plants for cost reduction, productivity and quality improvement programs.
We do this by providing quality technical services to evaluate alternative raw materials, facilitating the continued success of our products for customer applications, providing technology to improve our products, processes and applications and providing support to our manufacturing plants for cost reduction, productivity and quality improvement programs.
Safety and Health The top priority at Avient is the safety and health of our associates, and our ultimate goal is to operate injury free. Progress toward this goal is measured at the business unit and regional levels, communicated globally, and linked to a number of recognition mechanisms.
Safety and Health The top priority at Avient is the safety and health of our associates, and our ultimate goal is to operate injury free. Progress toward this goal is measured at the business unit and regional levels, communicated globally, and linked to a number of recognition programs.
Our key development opportunities include nomination-based leadership programs (such as NextGen, Engage, and Elevate), foundational leadership training for all current or aspiring people managers, called Core Leadership, and Lean Six Sigma training at a variety of levels, where individuals can be certified for job-specific Lean Six Sigma programs, up through Master Black Belt certification.
Our key development opportunities include nomination-based leadership programs (such as NextGen, Emerging Leaders and Elevate), foundational leadership training for all current or aspiring people managers, called Core Leadership, and Lean Six Sigma training at a variety of levels, where individuals can be certified for job-specific Lean Six Sigma programs, up through Master Black Belt certification.
We also continue to be recognized as an American Chemistry Counsel Responsible Care® company and set high standards for our operations as we strive to achieve our goal of zero recordable injuries. Employee Recruitment Avient’s success is driven by having the best talent in the right roles.
We also continue to be recognized as an American Chemistry Counsel Responsible Care® company and set high standards for our operations as we strive to achieve our goal of zero recordable injuries. 4 AVIENT CORPORATION Employee Recruitment Avient’s success is driven by having the best talent in the right roles.
We celebrate, reward and share our associates’ great work through our recognition programs, including those that all associates can earn for their extra effort and impact, as well as those that are specific to a position or role in the Company, such as excellence in technology, sales, and manufacturing.
Associate Benefits: Awards and Recognition Programs We celebrate, reward and share our associates’ great work through our recognition programs, including those that all associates can earn for their extra effort and impact, as well as those that are specific to a position or role in the Company, such as excellence in technology, sales, and manufacturing.
Continual improvement and preventative risk reductions are key focus areas and, in 2022, one of our annual incentive plan metrics measured the engagement of our employees in safety activities.
Continual improvement and preventative risk reductions are key focus areas and, in 2023, one of our annual incentive plan metrics measured the engagement of our employees in safety activities.
The risk of additional costs and liabilities, however, is inherent in certain plant operations and certain products produced at 6 AVIENT CORPORATION these plants, as is the case with other companies in the plastics industry. Therefore, we may incur additional costs or liabilities in the future.
The risk of additional costs and liabilities, however, is inherent in certain plant operations and certain products produced at these plants, as is the case with other companies in the plastics industry. Therefore, we may incur additional costs or liabilities in the future.
In wire and cable, thermoplastics and composites serve to protect by providing electrical insulation, flame 2 AVIENT CORPORATION resistance, durability, water resistance, water swelling and color coding to engineered fibers, yarn products, wire coatings and connectors.
In wire and cable, thermoplastics and composites serve to protect by providing electrical insulation, flame resistance, durability, water resistance, water swelling and color coding to engineered fibers, yarn products, wire coatings and connectors.
This allows us to rapidly translate new technologies into new products, helping us advance a more circular economy with reduced carbon footprint. Our investment in product research and development was $84.9 million in 2022, $83.2 million in 2021, and $59.8 million in 2020. Methods of Distribution We sell products primarily through direct sales personnel, distributors, and commissioned sales agents.
This allows us to rapidly translate new technologies into new products, helping us advance a more circular economy with reduced carbon footprint. Our investment in product research and development was $90.3 million in 2023, $84.9 million in 2022, and $83.2 million in 2021. Methods of Distribution We sell products primarily through direct sales personnel, distributors, and commissioned sales agents.
For example, the packaging industry requires plastics that help keep food fresh and free of contamination while providing a variety of options for product display, and offering advantages in terms of weight and user-friendliness.
In the packaging industry, plastics are required that help keep food fresh and free of contamination while providing a variety of options for product display, and offering advantages in terms of weight and user-friendliness.
We currently have 104 manufacturing sites in North America, South America, Europe, the Middle East, Asia, and Africa (EMEA). In 2022, the Company had sales of $3.4 billion from continuing operations, approximately 61% of which were to customers outside the United States.
We currently have 102 manufacturing sites in North America, South America, Europe, the Middle East, Asia, and Africa (EMEA). In 2023, the Company had sales from continuing operations of $3.1 billion, approximately 61% of which were to customers outside the United States.
As a key aspect of our talent pipeline, we partner with leading universities around the world to hire approximately 140 associates each year into full-time, co-op or internship opportunities.
As a key aspect of our talent pipeline, we partner with leading universities around the world to hire associates into full-time, co-op and internship opportunities.
Our Employee Resource Groups include: PRIDE at Avient (which is working to maintain a safe and accepting environment that enables LGBTQ+ associates to perform to their fullest potential and contribute to the success of our Company), HYPE (which stands for Harnessing Young Potential Energy and is building a collaborative network of Avient’s young professionals), LEAD by Women (which promotes diversity and inclusion by increasing access to the tools and resources necessary to build leadership skills and accelerate careers) and EMBRACE (which focuses on understanding and valuing the many diverse cultures and backgrounds of our associates).
Our ERGs include: PRIDE at Avient (which is working to maintain a safe and accepting environment that enables LGBTQ+ associates to perform to their fullest potential and contribute to the success of our Company), HYPE (which stands for Harnessing Young Potential Energy and is building a collaborative network of Avient’s young professionals), LEAD by Women (which promotes inclusion by increasing access to the tools and resources necessary to build leadership skills and accelerate careers), EMBRACE (which focuses on understanding and valuing the many diverse cultures and backgrounds of our associates) and SERVE (which stands for Sustaining Engagement for Returning Veteran Employees and is focusing on our U.S-based veteran community).
We agree to payment terms with our customers and suppliers that are competitive. Significant Customers No customer accounted for more than 3% of our consolidated revenues in 2022 and we do not believe we would suffer a material adverse effect to our consolidated financial statements if we were to lose any single customer.
Significant Customers No customer accounted for more than 3% of our consolidated revenues in 2023 and we do not believe we would suffer a material adverse effect to our consolidated financial statements if we were to lose any single customer.
Our goal is to provide customers with specialized and sustainable materials and solutions through our global footprint, broad market knowledge, technical expertise, product breadth, manufacturing operations, a fully integrated information technology network and raw material procurement leverage. Our end markets include consumer, packaging, defense, healthcare, industrial, transportation, building and construction, telecommunications and energy.
Our goal is to provide customers with specialized and sustainable materials and solutions through our global footprint, broad market knowledge, technical expertise, product breadth, manufacturing operations and raw materials procurement leverage. Our end markets include consumer, packaging, defense, healthcare, industrial, transportation, building and construction, telecommunications and energy. Polymer Industry Overview Avient is a specialty formulator within the polymer industry.
In our operations, we must comply with product-related governmental law and regulations affecting the plastics industry generally and also with content-specific law, regulations and non-governmental standards. We believe that compliance with current governmental laws and regulations and with non-governmental content-specific standards will not have a material adverse effect on our financial position, results of operations or cash flows.
We believe that compliance with current governmental laws and regulations and with non-governmental content-specific standards will not have a material adverse effect on our financial position, results of operations or cash flows.
As of December 31, 2022, Avient employed approximately 9,700 people, 34% of which were located in the U.S. and Canada, 35% were located in Europe, Middle East, and Africa, 24% were located in Asia, and 7% were located in Latin America.
As of December 31, 2023, Avient employed approximately 9,300 people, 34% of which were located in the U.S. and Canada, 34% were located in EMEA, 25% were located in Asia, and 7% were located in Latin America.
Each type of thermoplastic resin has to ultimately achieve unique characteristics (such as flexibility, strength or durability) suitable for use in a particular end-use application. The formulation science and manufacturing processes required to achieve those characteristics is the specialty role that Avient plays.
Each type of thermoplastic resin has to ultimately achieve unique characteristics (such as flexibility, strength or durability) suitable for use in a particular end-use application.
Please see Note 3, Discontinued Operations , to the accompanying consolidated financial statements for additional information. Our segments are further detailed in Note 15, Segment Information , to the accompanying consolidated financial statements. Competition The manufacturing of custom and proprietary formulated thermoplastics, polymer composites, and color and additives systems is highly competitive.
Avient Segments We operate in two reportable segments: (1) Color, Additives and Inks and (2) Specialty Engineered Materials. Our segments are further detailed in Note 15, Segment Information , to the accompanying consolidated financial statements. Competition The manufacturing of custom and proprietary formulated thermoplastics, polymer composites, and color and additives systems is highly competitive.
In 2022, we reduced injuries 6%, and had a recordable incident rate of 0.51 per 100 full-time workers per year, compared to the industry average of 3.40 in 2021.
In 2023, we had a recordable incident rate of 0.58 per 100 full-time workers per year, compared to the Plastics and Rubber Products Manufacturing industry (NAICS Code 326) average of 3.40 in 2022.
We believe that we are in material compliance with all applicable requirements. We are strongly committed to safety as evidenced by our low injury incidence rate of 0.51 per 100 full-time workers per year in 2022 and 0.55 in 2021. The 2021 average injury incidence rate for our NAICS Code (326 Plastics and Rubber Products Manufacturing) was 3.40.
We believe that we are in material compliance with all applicable requirements. 6 AVIENT CORPORATION We are strongly committed to safety as evidenced by our low injury incidence rate of 0.58 per 100 full-time workers per year in 2023 and 0.51 in 2022.
We believe that our four-pillar strategy of Specialization, Globalization, Commercial Excellence and Operational Excellence, along with our focus on putting our customers and their needs first, enables us to successfully compete in the market. Raw Materials The primary raw materials used by our manufacturing operations are polyolefin and other thermoplastic resins, TiO2, inorganic and organic pigments, specialty additives and ethylene.
We believe that our four-pillar strategy of Specialization, Globalization, Commercial Excellence and Operational Excellence, along with our focus on putting our customers and their needs first, enables us to successfully compete in the market.
Thermoplastic composites include base resins, but are combined with a structural element such as glass, carbon or polymer fibers to enhance strength, rigidity and structure.
Each type of thermoplastic has unique qualities and characteristics that make it appropriate for use in a particular application. Thermoplastic composites include base resins, but are combined with a structural element such as glass, carbon or polymer fibers to enhance strength, rigidity and structure.
From a management perspective, 60% of our CEO's direct reports are female, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company. More broadly within the Company, our diversity and inclusion approach is fostered by multiple Employee Resource Groups that are driving improvements and opening opportunities throughout our organization.
From a management perspective, 60% of our CEO's direct reports are female, racially or ethnically diverse, which we believe sets the right tone and expectation for diversity and inclusion within the Company. The vision that guides our collective efforts is consistent and unwavering: to be the Company of choice for all.
We actively seek collaborative and innovative change-makers who are passionate about our values through numerous channels, including employee referrals, job fairs, talent networks, industry associations, and directly from universities.
We actively seek collaborative and innovative change-makers who are passionate about our values through numerous channels, including employee referrals, job fairs, talent networks, industry associations, and directly from universities. Our roles provide opportunities for personal and professional growth, while working in an organization focused on solving the most complex challenges for our customers and suppliers, and driving sustainability.
We hold the American Chemistry Council's certification as a Responsible Care Management System ® (RCMS) company. Certification was granted based on Avient's conformance to the RCMS's comprehensive environmental health, safety and security requirements. The RCMS certification affirms the importance Avient places on having world-class environmental, health, safety and security performance.
The 2022 average injury incidence rate for our NAICS Code (326 Plastics and Rubber Products Manufacturing) was 3.40. We hold the American Chemistry Council's certification as a Responsible Care Management System ® (RCMS) company. Certification was granted based on Avient's conformance to the RCMS's comprehensive environmental health, safety and security requirements.
Seasonality Sales of our products and services are typically seasonal, as demand has historically been slower in the third and fourth calendar quarters of the year. 3 AVIENT CORPORATION Working Capital Practices Our products are generally manufactured with a short turnaround time, and the scheduling of manufacturing activities from customer orders generally includes enough lead time to assure delivery of an adequate supply of raw materials.
Working Capital Practices Our products are generally manufactured with a short turnaround time, and the scheduling of manufacturing activities from customer orders generally includes enough lead time to assure delivery of an adequate supply of raw materials. We agree to payment terms with our customers and suppliers that are competitive.
A Great Place to Work® In addition to holding action planning sessions, new manager assimilations, and 360 reviews, we also conduct annual employee engagement surveys. Last year, employees in over 40 countries, and more than 130 locations participated, providing actionable feedback to support our ongoing employee engagement efforts.
Last year, employees in over 40 countries, and more than 130 locations participated, providing actionable feedback to support our ongoing employee engagement efforts. We are proud to share that our associates feel we are a Great Place to Work® and, in 2023, we received our fifth certification.
In general, there is adequate supply and capacity from a variety of suppliers to serve our business. In 2022, we experienced certain supply disruptions, shortages, volume allocations and logistical delays for some of these materials, none of which had a material impact on our business.
In 2022, we experienced certain supply disruptions, shortages, volume allocations and logistical delays for some of these materials. In 2023, most global supply chains relevant to our business returned to pre-pandemic operational levels, and none of the few disruptions that occurred had a material impact on our business.
Diversity and Inclusion We recognize the immense benefits that a diverse team brings to our organization, including delivering better business outcomes. Our talented people leverage their diverse backgrounds and skills toward a common goal: meeting the needs of the present without compromising the ability of future generations to do the same.
Our talented people leverage their diverse backgrounds and skills toward a common goal: meeting the needs of the present without compromising the ability of future generations to do the same. This spirit of inclusive collaboration can be felt throughout our Company.
Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 42% of our Board of Directors are female or racially diverse.
It drives the innovation that earns us leadership positions in the markets we serve and underpins the high level of respect we show each other every day. Our commitment to diversity begins at the highest levels of our organization, as evidenced by the fact that 50% of our Board of Directors are female or racially diverse.
Rather, Avient sources various resins, polymers and additives, then employs additional chemistry in formulating those materials into a highly engineered, unique material for a specific use. Thermoplastic polymers are characterized by their ability to be reshaped repeatedly into new forms after heat and pressure are applied. Thermoplastics offer versatility and a wide range of applications.
Thermoplastic polymers are characterized by their ability to be reshaped repeatedly into new forms after heat and pressure are applied. Thermoplastics offer versatility and a wide range of applications. The major types of thermoplastics include polyethylene, polypropylene, polystyrene, polyester and a range of specialized engineering resins.
Polymer Industry Overview Avient is a specialty formulator within the polymer industry. We have the scientific know-how in material science required to bridge the large, commodity base resin producers and the companies who ultimately manufacture end products utilizing formulated polymer materials.
We have the scientific know-how in materials science required to bridge the large, commodity base resin producers and the companies who ultimately manufacture end products utilizing formulated polymer materials. Polymers are a class of organic materials that are generally produced by converting natural gas or crude oil derivatives into monomers, such as ethylene, propylene, and styrene.
Continuous development drives associates to reach their full potential and we strive to fill at least half of all open manager roles and higher with internal promotions. This is completed through regular performance feedback, individual development plans, mentoring programs and nomination-based leadership development programs for key top talent.
We also focus on development for our production associates in aspects of Lean Six Sigma, safety, continuous improvement, and our ENGAGE program. Continuous development drives associates to reach their full potential and we strive to fill at least half of all open manager roles and higher with internal promotions.
Other initiatives, including Mentoring at Avient and campus partnerships, are vital for progress in our diversity and inclusion journey.
In 2023, we launched our newest ERG, RAISE, which is focused on supporting associates who are parents and caregivers to connect, learn and empower one another to balance work and home responsibilities. Other initiatives, including Mentoring at Avient and campus partnerships, are vital for progress in our inclusion journey.
Associate Benefits: Awards and Recognition Programs Our ongoing associate feedback is highly valued, discussed, and most importantly, acted upon, to make improvements. This includes our culture and unique benefits we offer.
A Great Place to Work® Our ongoing associate feedback is highly valued, discussed, and most importantly, acted upon, to make improvements. In addition to holding action planning sessions, new manager assimilations, and 360 reviews, we also conduct annual employee engagement surveys.
We continue to offer our global benefit of community service hours, where each associate is provided 16 hours of paid time off each year to participate in activities to support and help create more sustainable communities.
In addition, we provide our associates an opportunity to support and help create more sustainable communities by giving each associate 16 hours of paid time off each year. In 2023, over 100 of our sites and 3,600 of our associates generously gave over 7,000 volunteer hours and $1.5 million in donations around the world.
Nevertheless, we have management processes designed to rigorously protect our inventions and trademarks.
Nevertheless, we have management processes designed to rigorously protect our inventions and trademarks. 3 AVIENT CORPORATION Seasonality Sales of our products and services are typically seasonal, as demand has historically been slower in the third and fourth calendar quarters of the year.
Removed
The major types of thermoplastics include polyethylene, polypropylene, polystyrene, polyester and a range of specialized engineering resins. Each type of thermoplastic has unique qualities and characteristics that make it appropriate for use in a particular application.
Added
The formulation science and manufacturing processes required to achieve those characteristics is the specialty role that Avient plays. 2 AVIENT CORPORATION The following are examples, by industry, where Avient solutions address specific market requirements or challenges.
Removed
Avient Segments We operate in two reportable segments: (1) Color, Additives and Inks and (2) Specialty Engineered Materials. The Distribution business, which previously was a separate reportable segment, was sold on November 1, 2022. The results of the Distribution business are presented as discontinued operations.
Added
Raw Materials The primary raw materials used by our manufacturing operations are polyolefin and other thermoplastic resins, titanium oxide, inorganic and organic pigments, specialty additives and ethylene. In general, there is adequate supply and capacity from a variety of suppliers to serve our business.
Removed
Not only did our injury incident rate decline last year, but the severity of those injuries also declined, down 31% from the prior year based on the average days away from work as a result of an injury.
Added
This is completed through regular performance feedback, individual development plans, mentoring programs and nomination-based leadership development programs for key top talent. Diversity and Inclusion We recognize the immense benefits that a diverse team brings to our organization, including delivering better business outcomes.
Removed
Our roles provide opportunities for 4 AVIENT CORPORATION personal and professional growth, while working in an organization focused on solving the most complex challenges for our customers and suppliers, and driving sustainability.
Added
We leverage Employee Resource Groups (ERGs) to help educate and inspire our global workforce and fortify strong business practices.
Removed
This spirit of inclusive collaboration can be felt throughout our Company. It drives the innovation that earns us leadership positions in the markets we serve and underpins the high level of respect we show each other every day.
Added
The RCMS certification affirms the importance Avient places on having world-class environmental, health, safety and security performance. In our operations, we must comply with product-related governmental law and regulations affecting the plastics industry generally and also with content-specific law, regulations and non-governmental standards.
Removed
The vision that guides our collective efforts is consistent and unwavering: to be the Company of choice for all. It is from this vision that our Employee Resource Groups were born and flourish today. Each group has its own mission and supporting activities, and their efforts coalesce to help educate and inspire our global workforce and fortify sustainable business practices.
Removed
Our newest Employee Resource Group is SERVE (which stands for Sustaining Engagement for Returning Veteran Employees). The vision of this group is to help Avient become a top employer for veteran talent and to help provide support and resources to help veterans navigate their career transition and bring value to the Company.
Removed
Additionally, we have recently created the role of Global Director for the Advancement of Diversity & Inclusion, which is focused on the key initiatives that will drive inclusion, engagement and diversity. The executive leadership team oversees our diversity and inclusion initiatives, which enhance leadership accountability in advancing diversity and inclusion.
Removed
Over 100 of our sites and 3,600 of our associates helped make a positive impact on associates in need as their generosity provided over 8,200 volunteer hours and $1.7M in donations around the world.
Removed
We are proud to share that our associates feel we are a Great Place to Work® and, in 2022, we received our fourth certification and the highest scores in the history of our Company.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

1 edited+0 added−0 removed9 unchanged
Biggest changeThe contents of our website are not part of this Annual Report on Form 10-K, and the reference to our website does not constitute incorporation by reference into this Form 10-K of the information contained at that site. ITEM 1A.
Biggest changeThe contents of our website are not part of this Annual Report on Form 10-K, and the reference to our website does not constitute incorporation by reference into this Form 10-K of the information contained at that site. 7 AVIENT CORPORATION ITEM 1A.

Item 2. Properties

Properties — owned and leased real estate

17 edited+3 added−14 removed29 unchanged
Biggest changeFailures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations, and reputation, and increase risk of litigation.
Biggest changeFailures or delays (whether actual or perceived) in achieving our strategies or expectations related to climate change and other environmental matters could adversely affect our business, operations, and reputation, and increase risk of litigation. 10 AVIENT CORPORATION Capital and Credit Risks Disruptions in the global credit, financial and/or currency markets could limit our access to credit or otherwise harm our financial results, which could have a material adverse impact on our business.
Depending on their nature and scope, such threats and system failures could potentially lead to the compromising of confidential information and communications, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could cause customers to cancel orders or otherwise adversely affect our reputation, competitiveness and results of operations.
Depending on their nature and scope, such threats and system failures could lead to the compromising of confidential information and communications, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could cause customers to cancel orders or otherwise adversely affect our reputation, competitiveness and results of operations.
Several factors have in the past and may in the future affect the demand for and supply of our products and services, including: • economic downturns or other volatility in the significant end markets that we serve; • product obsolescence or technological changes that unfavorably alter the value/cost proposition of our products and services; • competition from existing and unforeseen polymer and non-polymer based products; • declines in general economic conditions or reductions in industrial production growth rates, both domestically and globally, which could impact our customers’ ability to pay amounts owed to us; • changes in environmental regulations that limit our ability to sell our products and services in specific markets; • changes in laws and regulations regarding plastic materials; and 8 AVIENT CORPORATION • inability to obtain raw materials or supply products to customers due to factors such as supplier work stoppages, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather.
Several factors have in the past and may in the future affect the demand for and supply of our products and services, including: • economic downturns or other volatility in the significant end markets that we serve; • product obsolescence or technological changes that unfavorably alter the value/cost proposition of our products and services; • competition from existing and unforeseen polymer and non-polymer based products; • declines in general economic conditions or reductions in industrial production growth rates, both domestically and globally, which could impact our customers’ ability to pay amounts owed to us; • changes in environmental regulations that limit our ability to sell our products and services in specific markets; • changes in laws and regulations regarding plastic materials; and • inability to obtain raw materials or supply products to customers due to factors such as supplier work stoppages, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather.
Risks inherent in international operations include, but are not limited to, the following: • changes in local government regulations and policies including, but not limited to, duty or tariff restrictions, foreign currency exchange controls or monetary policy, repatriation of earnings, expropriation of property, investment limitations and tax policies; • political and economic instability and disruptions, including labor unrest, withdrawal or renegotiation of trade agreements, natural disasters, major public health issues, pandemics, civil strife, acts of war, insurrection and terrorism; 7 AVIENT CORPORATION • legislation that regulates the use of chemicals; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act; • compliance with international trade laws and regulations, including export control and economic sanctions; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies; • reduced protection of intellectual property rights; • other risks arising out of foreign sovereignty over the areas where our operations are conducted; and • increasingly complex laws and regulations concerning privacy and data security, including, but not limited to, the European Union's General Data Protection Regulation.
Risks inherent in international operations include, but are not limited to, the following: • changes in local government regulations and policies including, but not limited to, duty or tariff restrictions, foreign currency exchange controls or monetary policy, repatriation of earnings, expropriation of property, investment limitations and tax policies; • political and economic instability and disruptions, including labor unrest, withdrawal or renegotiation of trade agreements, natural disasters, major public health issues, pandemics, civil strife, acts of war, insurrection and terrorism; • supply chain disruptions; • legislation that regulates the use of chemicals; • disadvantages of competing against companies from countries that are not subject to U.S. laws and regulations, including the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act; • compliance with international trade laws and regulations, including export control and economic sanctions; • difficulties in staffing and managing multi-national operations; • limitations on our ability to enforce legal rights and remedies; • reduced protection of intellectual property rights; • other risks arising out of foreign sovereignty over the areas where our operations are conducted; and • increasingly complex laws and regulations concerning privacy and data security, including, but not limited to, the European Union's General Data Protection Regulation.
Accordingly, we may be forced to delay raising capital, issue shorter tenors than we prefer or pay unattractive interest rates, which could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility. We are exposed to fluctuations in foreign currency exchange rates.
Accordingly, we may be forced to delay raising capital, issue debt with shorter tenors than we prefer or pay unattractive interest rates, which could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility. We are exposed to fluctuations in foreign currency exchange rates.
We have experienced cybersecurity incidents in the past and we could experience similar incidents in the future. To date, no cybersecurity incident or attack has had a material impact on our business or consolidated financial statements. We are subject to risks associated with climate change and potential climate change legislation, regulation and international agreements.
We have experienced targeted and non-targeted cybersecurity attacks in the past and we could experience similar incidents in the future. To date, no cybersecurity incident or attack has had a material impact on our business or consolidated financial statements. We are subject to risks associated with climate change and potential climate change legislation, regulation and international agreements.
The agreements governing our senior secured revolving credit facility and our senior secured term loans, and the indentures and credit agreements governing our other debt, contain a number of customary restrictive covenants that, among other things, limit our ability to: sell or otherwise transfer assets, including in a spin-off, incur additional 10 AVIENT CORPORATION debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct.
The agreements governing our senior secured revolving credit facility and our senior secured term loan, and the indentures and credit agreements governing our other debt, contain a number of customary restrictive covenants that, among other things, limit our ability to: sell or otherwise transfer assets, including in a spin-off, incur additional debt or liens, consolidate or merge with any entity or transfer or sell all or substantially all of our assets, pay dividends or make certain other restricted payments, make investments, enter into transactions with affiliates, create dividend or other payment restrictions with respect to subsidiaries, make capital investments and alter the business we conduct.
Competitive pressures could also result in the loss of customers. 9 AVIENT CORPORATION Cybersecurity breaches, global information systems security threats and more sophisticated and targeted computer crime could pose a risk to our systems, networks and products, which could harm our business.
Competitive pressures could also result in the loss of customers. Cybersecurity breaches, global information systems security threats and computer crime could pose a risk to our systems, networks and products, which could harm our business.
Electricity and raw materials costs represent a substantial part of our manufacturing costs. Most of the raw materials we use are commodities and the price of each can fluctuate widely for a variety of reasons, including changes in availability because of major capacity additions or reductions or significant facility operating problems.
Most of the raw materials we use are commodities and the price of each can fluctuate widely for a variety of reasons, including changes in availability because of major capacity additions or reductions or significant facility operating problems.
If any of these events occur in the future, the demand for and supply of our products and services could suffer and potentially lead to asset impairment or otherwise adversely affect our results. We may experience difficulties integrating the APM business.
If any of these events occur in the future, the demand for and supply of our products and services could suffer and potentially lead to asset impairment or otherwise adversely affect our results. We may experience challenges in successfully integrating recent acquisitions.
Electricity, fuel, logistics and raw material costs could cause volatility in our results. The cost of our electricity, fuel, logistics and raw materials may not correlate with changes in the prices we receive for our products, either in the direction of the price change or in absolute magnitude.
The cost of our electricity, fuel, logistics and raw materials may not correlate with changes in the prices we receive for our products, either in the direction of the price change or in absolute magnitude. Electricity and raw materials costs represent a substantial part of our manufacturing costs.
While we have no significant maturities of long-term debt until 2025, our ability to pay interest on our debt and to satisfy our other debt obligations depends in part upon our future financial and operating performance and that of our subsidiaries, and upon our ability to renew or refinance borrowings.
Our ability to pay interest on our debt and to satisfy our other debt obligations depends in part upon our future financial and operating performance and that of our subsidiaries, and upon our ability to renew or refinance borrowings.
Business Risks Demand for and supply of our products and services have in the past been and may in the future be adversely affected by several factors, some of which we cannot predict or control.
Any of these risks could have an adverse effect on our international operations by reducing demand for our products. 8 AVIENT CORPORATION Business Risks Demand for and supply of our products and services have in the past been and may in the future be adversely affected by several factors, some of which we cannot predict or control.
For additional information, see Note 4, Goodwill and Intangible Assets , to the accompanying consolidated financial statements and “Critical Accounting Policies and Estimates” included in Item 7, " Management’s Discussion and Analysis of Financial Condition and Results of Operations .” COVID-19 Pandemic Risks The COVID-19 pandemic has had, and may continue to have, an adverse impact on our business.
For additional information on the results of our annual impairment testing, see Note 4, Goodwill and Intangible Assets , to the accompanying consolidated financial statements and “Critical Accounting Policies and Estimates” included in Item 7, " Management’s Discussion and Analysis of Financial Condition and Results of Operations .”
If we are unable to generate sufficient cash flow to meet our debt service obligations, we will have to pursue one or more alternatives, such as reducing or delaying capital or other expenditures, refinancing debt, selling assets, or raising equity capital.
If we are unable to generate sufficient cash flow to meet our debt service obligations, we will have to pursue one or more alternatives, such as reducing or delaying capital or other expenditures, refinancing debt, selling assets, or raising equity capital. 11 AVIENT CORPORATION We have a significant amount of goodwill, and any future goodwill impairment charges could adversely impact our results of operations.
Environmental compliance requirements imposed on us and our vendors may significantly increase the costs of these activities involving raw materials, energy, finished products and wastes. We may incur substantial costs, including fines, criminal or civil sanctions, damages, and remediation costs, or experience interruptions in our operations for violations of these laws.
Environmental compliance requirements imposed on us and our vendors may significantly increase the costs of these activities involving raw materials, energy, finished products and wastes.
Failure to successfully or cost-effectively integrate the APM business could have an adverse effect on our business, financial condition, results of operations and cash flow. Our manufacturing operations are subject to hazards and other risks associated with specialty formulation and the related storage and transportation of raw materials, products and waste.
While we have invested in both internal and external resources for this system implementation, including ongoing training, there are risks associated with a system implementation. Our manufacturing operations are subject to hazards and other risks associated with specialty formulation and the related storage and transportation of raw materials, products and waste.
Removed
Any of these risks could have an adverse effect on our international operations by reducing demand for our products. Higher energy costs worldwide and impacts of the ongoing conflict between Russia and Ukraine could adversely impact our results of operations.
Added
Failure to successfully or cost effectively integrate recent acquisitions, including APM (as defined below), could have an adverse effect on our financial condition, results of operations and cash flow. Over the next three years we are investing in a cloud-based ERP system, S/4HANA, which is expected to help us to further integrate acquisitions, better serve customers and achieve synergies.
Removed
The results of our operations have been in the past and can be in the future affected, positively and negatively, by volatility in the cost and availability of energy, which is subject to global supply and demand and other factors beyond our control.
Added
We may incur substantial costs, including fines, criminal or civil sanctions, damages, and remediation costs, or experience interruptions in our operations for violations of these laws. 9 AVIENT CORPORATION Electricity, fuel, logistics and raw material availability and costs could cause volatility in our results.
Removed
The ongoing conflict between Russia and Ukraine has impacted global energy markets, particularly in Europe, leading to high volatility and increasing prices for crude oil, natural gas and other energy supplies.
Added
As of December 31, 2023, we had goodwill of $1,719.3 million.
Removed
In the event that the supply of natural gas from Russia stops or is significantly reduced, there may be supply disruptions, increased prices, temporary shutdowns or closures of our manufacturing facilities, or further rationing of energy supply within countries where we do business, which could have a material adverse impact on our business or results of operations in those countries.
Removed
While we have developed contingency plans to flex and shift production in the case of temporary shutdowns or closures of our manufacturing facilities, we may be unable to shift all impacted operations to alternatives sites.
Removed
Capital and Credit Risks Disruptions in the global credit, financial and/or currency markets could limit our access to credit or otherwise harm our financial results, which could have a material adverse impact on our business.
Removed
We have a significant amount of goodwill, and any future goodwill impairment charges could adversely impact our results of operations. As of December 31, 2022, we had goodwill of $1,671.9 million.
Removed
Based on our 2022 goodwill impairment test, performed as of October 1, 2022, no reporting units were identified as being at risk of future impairment.
Removed
We have continued to closely monitor the impact of the COVID-19 pandemic on all aspects of our business, including how it has impacted our customers, employees, supply chain, and distribution network.
Removed
The scope and duration of the pandemic continues to be uncertain, and evolving factors such as the extent of any resurgences of the virus or emergence of new variants could impact the stability of the economic recovery and growth.
Removed
The extent to which our future operations may be adversely impacted by the COVID-19 pandemic will depend largely on these future developments, which are highly uncertain and cannot be accurately predicted.
Removed
The COVID-19 pandemic has in the past and could in the future negatively impact our business, financial condition and results of operations in a number of ways, including, but not limited to: • shutdowns or slowdowns of our production facilities; • disruptions in our supply chain and our ability to obtain raw materials, packaging and other sourced materials due to labor shortages, governmental restrictions or the failure of our suppliers, distributors or manufacturers to meet their obligations to us; 11 AVIENT CORPORATION • increases in raw material and commodity costs; • the inability of a significant portion of our workforce, including our management team, to work as a result of illness or government restrictions; and • reduced liquidity of customers, which could negatively impact the collectability of outstanding receivables and our cash flows.
Removed
The extent to which our business, results of operations, financial position or cash flows may ultimately be adversely impacted by the COVID-19 pandemic will depend largely on these future developments, which are highly uncertain and cannot be accurately predicted.
Removed
The impact of the COVID-19 pandemic may also exacerbate other risks and uncertainties described in this "Risk Factors" section, any of which could have a material effect on us.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

13 edited+3 added−5 removed7 unchanged
Biggest changeTraining and Organizational Development Senior Manager from March 2015 to December 2015. Training and Organizational Development Manager from July 2013 to February 2015. Prior to joining Avient, Ms. Gajewski held HR roles of increasing responsibility at AkzoNobel Decorative Coatings (a business unit of AkzoNobel specializing in manufacturing paints and coatings) from May 2009 to June 2013. Michael A.
Biggest changeGajewski held HR roles of increasing responsibility at AkzoNobel Decorative Coatings (a business unit of AkzoNobel specializing in manufacturing paints and coatings) from May 2009 to June 2013. Michael A. Garratt : Senior Vice President, President Color, Additives and Inks — EMEA, April 2020 to date. Senior Vice President, Chief Commercial Officer, April 2016 to March 2020.
Pederson served as a Senior Engineer at Boeing (a global aerospace company) from 1992 to 2001. Vinod Purayath, P.h.D. : Senior Vice President, Chief Technology Officer, June 2021 to date. Vice President, Technology, SunRise Memory Corp. (a semiconductor company based in California) from April 2019 to June 2021. Managing Director, Selective Removal Products Division, of Applied Materials, Inc.
Pederson served as a Senior Engineer at Boeing (a global aerospace company) from 1992 to 2001. Vinod Purayath, P.h.D. : Senior Vice President and Chief Technology Officer, June 2021 to date. Vice President, Technology, SunRise Memory Corp. (a semiconductor company based in California) from April 2019 to June 2021. Managing Director, Selective Removal Products Division, of Applied Materials, Inc.
Vice President, North American - General Industrial, Valspar Corporation (a manufacturer of paints and coatings) from June 2007 to May 2008. Vice President and General Manager, Power Coatings, Valspar Corporation from February 2002 to June 2007. Woon Keat Moh : Senior Vice President, President Color, Additives and Inks, Americas and Asia, April 2020 to date.
Vice President, North American - General Industrial, Valspar Corporation (a manufacturer of paints and coatings) from June 2007 to May 2008. Vice President and General Manager, Power Coatings, Valspar Corporation from February 2002 to June 2007. 14 AVIENT CORPORATION Woon Keat Moh : Senior Vice President, President Color, Additives and Inks — Americas and Asia, April 2020 to date.
He also served as Executive Director, Mergers and Acquisitions of CIBC World Markets (an investment bank in the domestic and international equity and debt capital markets) from 2006 to 2008. 14 AVIENT CORPORATION PART II
He also served as Executive Director, Mergers and Acquisitions of CIBC World Markets (an investment bank in the domestic and international equity and debt capital markets) from 2006 to 2008. 15 AVIENT CORPORATION PART II
Garratt worked for DuPont Dow Elastomers, a joint venture of Dupont and Dow (global manufacturers of engineered 13 AVIENT CORPORATION thermoset rubber and thermoplastic elastomer materials) in market development and product management positions, culminating in a regional commercial leadership role for Europe, the Middle East and Africa. Lisa K.
Garratt worked for DuPont Dow Elastomers, a joint venture of Dupont and Dow (global manufacturers of engineered thermoset rubber and thermoplastic elastomer materials) in market development and product management positions, culminating in a regional commercial leadership role for Europe, the Middle East and Africa. M.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. INFORMATION ABOUT OUR EXECUTIVE OFFICERS Executive officers are elected by our Board of Directors to serve one-year terms. The following table lists the name of each person serving as an executive officer of the Company, their age, and position with the Company as of February 6, 2023. Name Age Position Robert M.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 13 AVIENT CORPORATION INFORMATION ABOUT OUR EXECUTIVE OFFICERS Executive officers are elected by our Board of Directors to serve one-year terms. The following table lists the name of each person serving as an executive officer of the Company, their age, and position with the Company as of February 7, 2024.
John Midea, Jr. 58 Senior Vice President, Global Operations and Process Improvement Woon Keat Moh 49 Senior Vice President, President of Color, Additives and Inks, Americas and Asia Chris L. Pederson 56 Senior Vice President, President of Specialty Engineered Materials Vinod Purayath 44 Senior Vice President, Chief Technology Officer Joel R.
John Midea, Jr. 59 Senior Vice President, Global Operations and Process Improvement Woon Keat Moh 50 Senior Vice President, President of Color, Additives and Inks — Americas and Asia Chris L. Pederson 57 Senior Vice President, President of Specialty Engineered Materials Vinod Purayath 45 Senior Vice President and Chief Technology Officer Joel R.
President, Marmon Utility (a manufacturer of medium-high voltage utility, subsea and down-hole power cables and molded insulator systems) from March 2011 to September 2013. Chief Operating Officer, Excel Polymers (a custom thermoset rubber formulator) from November 2009 to December 2010. Vice President and General Manager - Americas Compounding and Performance Additives, Excel Polymers from March 2009 to November 2009.
Senior Vice President, President of Performance Products and Solutions, September 2013 to April 2016. President, Marmon Utility (a manufacturer of medium-high voltage utility, subsea and down-hole power cables and molded insulator systems) from March 2011 to September 2013. Chief Operating Officer, Excel Polymers (a custom thermoset rubber formulator) from November 2009 to December 2010.
Vice President and General Manager - Industrial and Consumer, Excel Polymers from December 2005 to March 2009. From April 1996 to June 2005, Mr.
Vice President and General Manager - Americas Compounding and Performance Additives, Excel Polymers from March 2009 to November 2009. Vice President and General Manager - Industrial and Consumer, Excel Polymers from December 2005 to March 2009. From April 1996 to June 2005, Mr.
Global HR Director, Talent Management and Corporate Functions, September 2022 to February 2023. Global HR Director, Color, Additives and Inks, February 2017 to August 2022 including an international assignment from December 2017 to September 2019 with additional responsibility for the EMEA and India region. Global Training and Organizational Development Director from January 2016 to January 2017.
Gajewski : Senior Vice President, Chief Human Resources Officer, February 2023 to date. Global HR Director, Talent Management and Corporate Functions, September 2022 to January 2023. Global HR Director, Color, Additives and Inks, February 2017 to August 2022 including an international assignment from December 2017 to September 2019 with additional responsibility for the EMEA and India region.
Senior Vice President and Chief Financial Officer of Hunt Consolidated, Inc. (a diversified holding company focused primarily in the energy industry) from January 2017 through December 2019. Vice President and Treasurer at Celanese Corporation (a global technology leader in the production of specialty materials and chemical products) from 2015 to 2017.
Beggs : Senior Vice President and Chief Financial Officer, August 2020 to date. Senior Vice President and Chief Financial Officer of Hunt Consolidated, Inc. (a diversified holding company focused primarily in the energy industry) from January 2017 through December 2019.
Chief Financial Officer, Material Solutions at Celanese Corporation from 2011 to 2015. Prior to 2011, Ms. Beggs worked in various roles of increasing responsibility at Celanese in both business and finance from May 2007. Kristen Gajewsk i: Senior Vice President, Chief Human Resources Officer, February 1, 2023 to date.
Vice President and Treasurer at Celanese Corporation (a global technology leader in the production of specialty materials and chemical products) from 2015 to 2017. Chief Financial Officer, Material Solutions at Celanese Corporation from 2011 to 2015. Prior to 2011, Ms. Beggs worked in various roles of increasing responsibility at Celanese in both business and finance from May 2007. Kristen A.
Patterson 50 Chairman, President and Chief Executive Officer Jamie A. Beggs 46 Senior Vice President, Chief Financial Officer Kristen A. Gajewski 41 Senior Vice President, Chief Human Resources Officer Michael A. Garratt 59 Senior Vice President, President Color, Additives and Inks, EMEA Lisa K. Kunkle 54 Senior Vice President, General Counsel and Secretary M.
Name Age Position Ashish K. Khandpur 56 President and Chief Executive Officer Jamie A. Beggs 47 Senior Vice President and Chief Financial Officer Kristen A. Gajewski 42 Senior Vice President, Chief Human Resources Officer Michael A. Garratt 60 Senior Vice President, President Color, Additives and Inks — EMEA M.
Removed
Rathbun 50 Senior Vice President, Mergers & Acquisitions Robert M. Patterson : Chairman, President and Chief Executive Officer, May 2016 to date. President and Chief Executive Officer, May 2014 to May 2016. Executive Vice President and Chief Operating Officer, March 2012 to May 2014. Executive Vice President and Chief Financial Officer, January 2011 to March 2012.
Added
Rathbun 51 Senior Vice President, Mergers and Acquisitions Ashish K. Khandpur, Ph.D. : President and Chief Executive Officer, December 2023 to date. Group President of the Transportation & Electronics business group for 3M Company ("3M") (a global manufacturing and technology company) from April 2021 to November 2023. During his 28-year career with 3M, Dr.
Removed
Senior Vice President and Chief Financial Officer, May 2008 to January 2011. Vice President and Treasurer of Novelis, Inc. (an aluminum rolled products manufacturer) from 2007 to May 2008. Vice President, Controller and Chief Accounting Officer of Novelis from 2006 to 2007. Mr.
Added
Khandpur held a series of roles with increasing responsibility, including Executive Vice President, Transportation & Electronic business group, from April 2019 to April 2021; Executive Vice President, Electronics & Energy business group, from July 2017 to March 2019; and Senior Vice President, Research & Development and Chief Technology Officer, from July 2014 to June 2017, among other roles. Jamie A.
Removed
Patterson served as Vice President and Segment Chief Financial Officer, Thermal and Flow Technology Segments of SPX Corporation (a multi-industry manufacturer and developer) from 2005 to 2006 and as Vice President and Chief Financial Officer, Cooling Technologies and Services of SPX from 2004 to 2005. Jamie A. Beggs : Senior Vice President, Chief Financial Officer, August 2020 to date.
Added
Global Training and Organizational Development Director from January 2016 to January 2017. Training and Organizational Development Senior Manager from March 2015 to December 2015. Training and Organizational Development Manager from July 2013 to February 2015. Prior to joining Avient, Ms.
Removed
Garrat t: Senior Vice President, President Color, Additives and Inks, EMEA, April 2020 to date. Senior Vice President, Chief Commercial Officer, April 2016 to March 2020. Senior Vice President, President of Performance Products and Solutions, September 2013 to April 2016.
Removed
Kunkle : Senior Vice President, General Counsel and Secretary, May 2015 to date. Vice President, General Counsel and Secretary, August 2007 to May 2015, Assistant General Counsel February 2007 to August 2007. Partner, Jones Day (a global law firm) from January 2006 to February 2007. Associate, Jones Day from August 1995 to January 2006. M.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−1 removed2 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common shares, $0.01 par value per share, are traded on the New York Stock Exchange under the symbol “AVNT.” As of February 6, 2023, there were 1,493 holders of record of our common shares. We currently have an authorized common share repurchase program.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common shares, $0.01 par value per share, are traded on the New York Stock Exchange under the symbol “AVNT.” As of February 7, 2024, there were 1,421 holders of record of our common shares. We currently have an authorized common share repurchase program.
On December 9, 2020, we announced that we would increase our share buyback by an additional 5.0 million shares. As of December 31, 2022, approximately 5.0 million shares remained available for purchase under these authorizations, which have no expiration.
On December 9, 2020, we announced that we would increase our share buyback by an additional 5.0 million shares. As of December 31, 2023, approximately 5.0 million shares remained available for purchase under these authorizations, which have no expiration.
Removed
For the full year 2022, we repurchased 0.8 million common shares at a weighted average share price of $45.53. During the three months ended December 31, 2022, we repurchased no common shares as shown in the table below.
Added
During the twelve months ended December 31, 2023, we did not repurchase any common shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

62 edited+20 added−23 removed34 unchanged
Biggest changeThe results of the Distribution business are presented as discontinued operations in the Consolidated Statement of Income. 17 AVIENT CORPORATION Results of Operations Variances — Favorable (Unfavorable) 2022 versus 2021 (Dollars in millions, except per share data) 2022 2021 2020 Change % Change Sales $ 3,396.9 $ 3,315.5 $ 2,214.9 $ 81.4 2.5 % Cost of sales 2,514.2 2,371.7 1,554.9 (142.5) (6.0) % Gross margin 882.7 943.8 660.0 (61.1) (6.5) % Selling and administrative expense 639.4 664.1 548.4 24.7 3.7 % Operating income 243.3 279.7 111.6 (36.4) (13.0) % Interest expense, net (119.8) (75.2) (74.5) (44.6) (59.3) % Other (expense) income, net (59.7) (1.0) 24.0 (58.7) nm Income from continuing operations before income taxes 63.8 203.5 61.1 (139.7) (68.6) % Income tax benefit (expense) 19.3 (51.9) 11.7 71.2 nm Net income from continuing operations $ 83.1 $ 151.6 $ 72.8 $ (68.5) (45.2) % Income from discontinued operations, net of income taxes 620.3 79.0 60.6 541.3 nm Net income 703.4 230.6 133.4 472.8 205.0 % Net (income) loss attributable to noncontrolling interests (0.3) 0.2 (1.8) (0.5) nm Net income attributable to Avient common shareholders $ 703.1 $ 230.8 $ 131.6 $ 472.3 204.6 % Earnings per share attributable to Avient common shareholders - basic: Continuing operations $ 0.91 $ 1.66 $ 0.79 Discontinued operations 6.80 0.87 0.67 Total $ 7.71 $ 2.53 $ 1.46 Earnings per share attributable to Avient common shareholders - diluted: Continuing operations $ 0.90 $ 1.65 $ 0.78 Discontinued operations 6.73 0.86 0.67 Total $ 7.63 $ 2.51 $ 1.45 nm - not meaningful Sales Sales increased $81.4 million, or 2.5%, in 2022 compared to 2021.
Biggest changeThe results of the Distribution business are presented as discontinued operations for all periods presented. 18 AVIENT CORPORATION Results of Operations Variances — Favorable (Unfavorable) 2023 versus 2022 (Dollars in millions, except per share data) 2023 2022 2021 Change % Change Sales $ 3,142.8 $ 3,396.9 $ 3,315.5 $ (254.1) (7.5) % Cost of sales 2,250.3 2,514.2 2,371.7 263.9 10.5 % Gross margin 892.5 882.7 943.8 9.8 1.1 % Selling and administrative expense 695.7 639.4 664.1 (56.3) (8.8) % Operating income 196.8 243.3 279.7 (46.5) (19.1) % Interest expense, net (115.3) (119.8) (75.2) 4.5 3.8 % Other income (expense), net 5.8 (59.7) (1.0) 65.5 nm Income from continuing operations before income taxes 87.3 63.8 203.5 23.5 36.8 % Income tax (expense) benefit (11.0) 19.3 (51.9) (30.3) nm Net income from continuing operations $ 76.3 $ 83.1 $ 151.6 $ (6.8) (8.2) % (Loss) income from discontinued operations, net of income taxes (0.1) 620.3 79.0 (620.4) nm Net income 76.2 703.4 230.6 (627.2) (89.2) % Net (income) loss attributable to noncontrolling interests (0.5) (0.3) 0.2 (0.2) nm Net income attributable to Avient common shareholders $ 75.7 $ 703.1 $ 230.8 $ (627.4) (89.2) % Earnings per share attributable to Avient common shareholders - basic: Continuing operations $ 0.83 $ 0.91 $ 1.66 Discontinued operations — 6.80 0.87 Total $ 0.83 $ 7.71 $ 2.53 Earnings per share attributable to Avient common shareholders - diluted: Continuing operations $ 0.83 $ 0.90 $ 1.65 Discontinued operations — 6.73 0.86 Total $ 0.83 $ 7.63 $ 2.51 Gross margin as a percentage of sales 28.4 % 26.0 % 28.5 % nm - not meaningful Sales Sales decreased $254.1 million, or 7.5%, in 2023 compared to 2022.
The Company maintains a senior secured revolving credit facility, which matures on October 26, 2026 and provides a maximum borrowing facility size of $500.0 million, subject to a borrowing base with advances against certain U.S. and international accounts receivable, inventory and other assets as specified in the agreement.
The Company maintains a senior secured revolving credit facility (the Revolving Credit Facility), which matures on October 26, 2026 and provides a maximum borrowing facility size of $500.0 million, subject to a borrowing base with advances against certain U.S. and international accounts receivable, inventory and other assets as specified in the agreement.
Examples of how our material science is enabling sustainability for our customers include developing unique technologies that improve the recyclability of products and allow recycled content to be incorporated, thus advancing a more circular economy; light-weighting solutions that replace heavier traditional materials like metal, glass and wood, which can improve fuel efficiency in all modes of transportation and reduce carbon footprint; and sustainable infrastructure solutions that increase energy efficiency, renewable energy, natural resource conservation and fiber optic / 5G network accessibility.
Examples of how our materials science is enabling sustainability for our customers include developing unique technologies that improve the recyclability of products and allow recycled content to be incorporated in products, thus advancing a more circular economy; light-weighting solutions that replace heavier traditional materials like metal, glass and wood, which can improve fuel efficiency in all modes of transportation and reduce carbon footprint; and sustainable infrastructure solutions that increase energy efficiency, renewable energy, natural resource conservation and fiber optic / 5G network accessibility.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “ Cautionary Note on Forward-Looking Statements ” and Item 1A, “ Risk Factors .” Our Business We are a premier formulator of specialized and sustainable material solutions that transform customer challenges into opportunities, bringing new products to life for a better world.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “ Cautionary Note on Forward-Looking Statements ” and Item 1A, “ Risk Factors .” Our Business We are a premier formulator of specialized and sustainable materials solutions that transform customer challenges into opportunities, bringing new products to life for a better world.
For a discussion of changes from fiscal year 2020 to fiscal year 2021, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022.
For a discussion of changes from fiscal year 2021 to fiscal year 2022, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 22, 2023.
The following table summarizes our obligations as of December 31, 2022 that are expected to impact liquidity and cash flow in future periods. See Liquidity and Capital Resources for additional discussion of our ability to generate and access cash to meet requirements as well as plans for use of cash in both the short-term and long-term.
The following table summarizes our obligations as of December 31, 2023 that are expected to impact liquidity and cash flow in future periods. See Liquidity and Capital Resources for additional discussion of our ability to generate and access cash to meet requirements as well as plans for use of cash in both the short-term and long-term.
For additional information about the acquisitions of businesses see Note 2. Pension and Other Post-retirement Benefit Plans The measurement of liabilities related to pension plans and other post-retirement benefits plans is based on assumptions related to future events including interest rates, return on plan assets, and mortality assumptions.
For additional information about the acquisitions of businesses see Note 2, Business Combinations . Pension and Other Post-retirement Benefit Plans The measurement of liabilities related to pension plans and other post-retirement benefits plans is based on assumptions related to future events including interest rates, return on plan assets, and mortality assumptions.
Additional information related to the accounting for environmental liabilities is found in Note 12. Acquisitions of Businesses The acquisition of a business is accounted for using the acquisition method of accounting which requires assets and liabilities to be recognized at their fair values on the acquisition date.
Additional information related to the accounting for environmental liabilities is found in Note 12, Commitments and Contingencies . Acquisitions of Businesses The acquisition of a business is accounted for using the acquisition method of accounting which requires assets and liabilities to be recognized at their fair values on the acquisition date.
Recent Developments APM Acquisition On September 1, 2022, the Company completed the acquisition of the DSM Protective Materials business, including the Dyneema® brand, the World's Strongest Fiber™. The ultra-light specialty fiber is stronger than steel and is used in demanding applications such as ballistic personal protection, marine and sustainable infrastructure, renewable energy, industrial protection and outdoor sports.
Recent Developments APM Acquisition On September 1, 2022, the Company completed the acquisition of the DSM Protective Materials business, including the Dyneema® brand, the World's Strongest Fiber™. The ultra-light specialty fiber is used in demanding applications such as ballistic personal protection, marine and sustainable infrastructure, renewable energy, industrial protection and outdoor sports.
Life expectancy is another significant assumption that impacts our pension and other post-retirement benefits obligation, which is based on mortality data and improvement scales issued by the Society of Actuaries. Additional information related to the accounting for pension and other post-retirement benefits is found in Note 11.
Life expectancy is another significant assumption that impacts our pension and other post-retirement benefits obligation, which is based on mortality data and improvement scales issued by the Society of Actuaries. Additional information related to the accounting for pension and other post-retirement benefits is found in Note 11, Employee Benefit Plans .
Capital expenditures will be focused primarily to support sales growth, investment in recent acquisitions, and other strategic investments. We also continue to consider acquisitions and other synergy opportunities that complement our core platforms. These actions will ensure that we continue to invest in our core capabilities and continue to support growth in key markets and product offerings.
Capital expenditures will be focused primarily to support sales growth, investment in recent acquisitions, and other strategic investments. We also continue to consider acquisitions and other synergy opportunities that complement our core platforms. These actions will enable us to continue to invest in our core capabilities and continue to support growth in key markets and product offerings.
Unless otherwise noted, the discussion that follows includes a comparison of our results of operations, liquidity and capital resources, and cash flows for fiscal years 2022 and 2021.
Unless otherwise noted, the discussion that follows includes a comparison of our results of operations, liquidity and capital resources, and cash flows for fiscal years 2023 and 2022.
Expected sources of cash needed to satisfy cash requirements in 2023 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if needed. Expected uses of cash in 2023 include interest payments, cash taxes, dividend payments, share repurchases, environmental remediation costs, restructuring costs and capital expenditures.
Expected sources of cash needed to satisfy cash requirements in 2024 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if necessary. Expected uses of cash in 2024 include interest payments, cash taxes, dividend payments, share repurchases, environmental remediation costs and capital expenditures.
The agreements governing our Revolving Credit Facility and our senior secured term loans, and the indentures and credit agreements governing other debt, contain a number of customary financial and restrictive covenants. As of December 31, 2022, we were in compliance with all customary financial and restrictive covenants pertaining to our debt.
The agreements governing our Revolving Credit Facility and our senior secured term loan, and the indentures and credit agreements governing other debt contain a number of customary financial and restrictive covenants. As of December 31, 2023, we were in compliance with all customary financial and restrictive covenants pertaining to our debt.
Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained. As we progress through certain benchmarks such as completion of remedial design and remedial action related to the Goodrich Corporation Calvert City site, additional information will become available that may require an adjustment to our existing reserves.
Our estimate of this liability may be revised as new regulations or technologies are developed or additional information is obtained. As we progress through remedial design and remedial action related to the Goodrich Corporation Calvert City site, additional information will become available that may require an adjustment to our existing accrual.
These letters of credit are issued by the bank in favor of third parties and are mainly related to insurance claims. Material Cash Requirements We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations.
These letters of credit are issued by the bank in favor of third parties and are mainly related to required insurance programs. 23 AVIENT CORPORATION Material Cash Requirements We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans and purchase obligations.
We also focus on 16 AVIENT CORPORATION accelerating the launch of new products and collaborating with our customers to develop new and unique solutions for their benefit while focusing on our four cornerstones of sustainability named above to ensure the growth we achieve is sustainable for us and our customers.
We also focus on accelerating the launch of new products and collaborating with our customers to develop new and unique solutions for their benefit while focusing on our four cornerstones of sustainability to ensure the growth we achieve is sustainable for us and our customers.
Twelve Months Ended December 31, (In millions) 2022 2021 U.S. federal income tax rate 21.0 % 21.0 % Tax expense (benefit) on GILTI and FDII 2.8 (1.0) International tax on certain current and prior year earnings 0.2 2.0 Non-deductible acquisition related costs 0.9 0.1 Research and development credit (5.0) (1.1) Capital losses (88.1) (0.6) State and local tax, net (4.0) 0.2 International tax rate differential (5.5) (0.3) International permanent items 15.0 0.2 Net impact of uncertain tax positions 12.9 1.0 Changes in valuation allowances 15.4 2.6 Other 4.2 1.4 Effective income tax rate (30.2) % 25.5 % 2022 compared to 2021 The consolidated effective income tax rate from continuing operations was a benefit of 30.2%.
Twelve Months Ended December 31, (In millions) 2023 2022 U.S. federal income tax rate 21.0 % 21.0 % Net tax on GILTI and FDII 1.9 2.8 International tax on certain current and prior year earnings 3.9 0.2 Non-deductible acquisition related costs — 0.9 Non-deductible interest 5.3 2.9 Research and development credit (3.7) (5.0) Capital losses (5.4) (88.1) State and local tax, net (2.3) (4.0) International tax rate differential 0.2 (5.5) International permanent items (7.5) 12.1 Net impact of uncertain tax positions (5.3) 12.9 Changes in valuation allowances 3.6 15.4 Other 0.9 4.2 Effective income tax rate 12.6 % (30.2) % The consolidated effective income tax rate from continuing operations was 12.6%, which was lower than the U.S. federal rate of 21%.
Headquartered in Avon Lake, Ohio, with 2022 sales of $3.4 billion from continuing operations, we have manufacturing and warehouses around the globe, with 61% of our sales outside the United States.
Headquartered in Avon Lake, Ohio, with 2023 sales of $3.1 billion from continuing operations, we have manufacturing and warehouses around the globe, with 61% of our sales to customers outside the United States.
The Company’s reporting units are at a level below the Company’s reportable operating segments. Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results.
Goodwill is assigned to each reporting unit, as this represents the lowest level that constitutes a business and is the level at which management regularly reviews the operating results.
Additionally, indefinite life intangible assets are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired.
Additionally, indefinite-lived trade names are evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the asset is impaired.
For additional information regarding our debt, please see Note 6, Financing Arrangements to the accompanying consolidated financial statements . 22 AVIENT CORPORATION Letters of Credit Our Revolving Credit Facility provides up to $50.0 million for the issuance of letters of credit, $15.2 million of which was used at December 31, 2022.
For additional information regarding our debt, please see Note 6, Financing Arrangements to the accompanying consolidated financial statements . Letters of Credit Our Revolving Credit Facility provides up to $50.0 million for the issuance of letters of credit, $13.3 million of which was used at December 31, 2023.
As of December 31, 2022, we had no borrowings outstanding under our Revolving Credit Facility, which had remaining availability of $246.2 million. As of December 31, 2021, we had no borrowings under our Revolving Credit Facility, which had remaining availability of $485.5 million.
As of December 31, 2023, we had no borrowings outstanding under our Revolving Credit Facility, which had remaining availability of $199.7 million. As of December 31, 2022, we had no borrowings under our Revolving Credit Facility, which had remaining availability of $246.2 million.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and assumptions that we believe are reasonable considering the related facts and circumstances.
GAAP) requires us to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and assumptions that we believe are reasonable considering the related facts and circumstances.
The acquired business is collectively referred to as APM and the acquisition is referred to as the APM Acquisition. The APM Acquisition enhances Avient's material offerings of composites and engineered fibers, and its results are reported in the Specialty Engineered Materials segment. Total consideration paid by the Company to complete the APM Acquisition was $1.4 billion, net of cash acquired.
The acquired business is collectively referred to as APM, and the acquisition is referred to as the APM Acquisition. The APM Acquisition enhances Avient's materials offerings of composites and engineered fibers. Total consideration paid by the Company was $1.4 billion, net of cash acquired.
For additional information about goodwill and intangible assets see Note 4. 25 AVIENT CORPORATION Recent and Future Adoption of Accounting Standards Information regarding recent and future adoption of accounting standards can be found in Note 1, Description of Business and Summary of Significant Accounting Policies, to the accompanying consolidated financial statements and is incorporated by reference herein. 26 AVIENT CORPORATION
Recent and Future Adoption of Accounting Standards Information regarding recent and future adoption of accounting standards can be found in Note 1, Description of Business and Summary of Significant Accounting Policies, to the accompanying consolidated financial statements and is incorporated by reference herein. 27 AVIENT CORPORATION
Avient records reductions to sales for customer incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience along with annual sales projections.
Avient records reductions to sales for customer incentives, primarily comprised of rebates, at the time of the initial sale. Rebates are estimated based on sales terms, historical experience along with annual sales projections. Rebate programs offered are typically credited to customers for achieving defined volume levels.
We recognize an estimate of environmental liabilities on an undiscounted basis for probable future environmental expenditures. Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable.
Any such provision is recognized using the Company's best estimate of the amount of loss incurred, or at the lower end of an estimated range, when a single best estimate is not determinable.
Additional information related to the accounting for income taxes is found in Note 13. Goodwill Goodwill is evaluated annually for impairment as of October 1 using either a quantitative or qualitative analysis. Goodwill is tested for impairment at the reporting unit level, and is based on the net assets for each reporting unit, including goodwill and intangible assets.
Additional information related to the accounting for income taxes is found in Note 13, Income Taxes . Goodwill Goodwill is evaluated annually for impairment as of October 1 using either a quantitative or qualitative analysis.
Events or circumstances that may result in an impairment review include changes in industry and market considerations, cost factors, financial performance, and other relevant entity-specific events that could affect inputs used to determine the respective fair values of the indefinite-lived intangible assets. The annual impairment test for indefinite-lived trade names was performed using a qualitative analysis in 2022.
Events or circumstances that may result in an impairment review include changes in industry and market considerations, cost factors, financial performance, and other relevant entity-specific events that could affect inputs used to determine the respective fair values of the indefinite-lived intangible assets. 26 AVIENT CORPORATION Quantitative analyses are performed by estimating the fair value for each indefinite-lived trade name using a royalty relief methodology.
We may from time to time seek to retire or purchase our outstanding debt with cash and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our 20 AVIENT CORPORATION outstanding common shares.
By laddering the maturity structure, we avoid concentrations of debt maturities, reducing liquidity risk. We may from time to time seek to retire or purchase our outstanding debt with cash and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. We may also seek to repurchase our outstanding common shares.
In some cases, the Company recovers a portion of the costs relating to these obligations from insurers or other third parties; however, the Company records such amounts only when they are collected. Environmental liabilities represents our best estimate of the remaining probable costs based upon information and technology currently available.
In some cases, the Company recovers a portion of the costs relating to these obligations from insurers or other third parties, and the recovery is recognized when realization of the proceeds is deemed as probable. 24 AVIENT CORPORATION Environmental liabilities represents our best estimate of the remaining probable costs based upon information and technology currently available.
Cash Flows The following table summarizes our cash flows from operating, investing and financing activities: (In millions) 2022 2021 2020 Cash provided by (used by): Operating Activities $ 398.4 $ 233.8 $ 221.6 Investing Activities (504.0) (150.2) (1,431.6) Financing Activities 166.4 (114.6) 982.0 Effect of exchange rate on cash (20.9) (17.3) 12.8 Net increase (decrease) in cash and cash equivalents $ 39.9 $ (48.3) $ (215.2) Operating activities In 2022, net cash provided by operating activities increased to $398.4 million as compared to $233.8 million in 2021, as a result of a reduction in working capital, offset by higher incentive payments in 2022 associated with 2021 performance.
Cash Flows The following table summarizes our cash flows from operating, investing and financing activities: (In millions) 2023 2022 2021 Cash provided by (used by): Operating Activities $ 201.6 $ 398.4 $ 233.8 Investing Activities (94.2) (504.0) (150.2) Financing Activities (201.7) 166.4 (114.6) Effect of exchange rate on cash (1.0) (20.9) (17.3) Net (decrease) increase in cash and cash equivalents $ (95.3) $ 39.9 $ (48.3) Operating Activities In 2023, net cash provided by operating activities decreased to $201.6 million as compared to $398.4 million in 2022, driven primarily by lower earnings and taxes paid associated with the sale of the Distribution business, partially offset by a decrease in working capital.
Capital expenditures are currently estimated to be approximately $150 million in 2023, primarily to support sales growth, our continued investment in recent acquisitions and other strategic investments.
Capital expenditures are currently estimated to be approximately $140 million in 2024, primarily to support sales growth, our continued investment in recent acquisitions, including the implementation of a cloud-based ERP system, S/4HANA, and other strategic investments.
Our commitment to AEPW is yet another example of the importance we place on being a global leader in all aspects of how we define sustainability: People, Products, Planet and Performance.
Our commitment to AEPW is yet another example of the importance we place on being a global leader in all aspects of how we define sustainability: People, Products, Planet and Performance. 17 AVIENT CORPORATION We have identified four key growth drivers to drive profitable, organic sales growth: sustainable solutions, composites, healthcare and emerging regions.
In addition, we continue to engage and invest in the Alliance to End Plastic Waste (AEPW). Avient joined the AEPW, as a founding member, along with 29 other member companies, in January 2019. The AEPW has thus far committed over $1.5 billion to help end plastic waste in the environment through investment in infrastructure, innovation, education, and clean-up activities.
In addition, we continue to engage and invest in the Alliance to End Plastic Waste (AEPW). Avient joined the AEPW as a founding member, along with 29 other member companies, in January 2019.
The following table summarizes our liquidity as of December 31, 2022: (In millions) Cash and cash equivalents $ 641.1 Revolving credit availability 246.2 Liquidity $ 887.3 As of December 31, 2022, approximately 57% of the Company’s cash and cash equivalents resided outside the United States.
The following table summarizes our liquidity as of December 31, 2023: (In millions) Cash and cash equivalents $ 545.8 Revolving credit availability 199.7 Liquidity $ 745.5 As of December 31, 2023, approximately 69% of the Company’s cash and cash equivalents resided outside the United States.
We recognize net tax benefits under the recognition and measurement criteria of FASB ASC Topic 740, Income Taxes, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns.
The utilization of certain deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors, such as changes in tax laws. 25 AVIENT CORPORATION We recognize net tax benefits under the recognition and measurement criteria of FASB ASC Topic 740, Income Taxes, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns.
A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant or other reconciling items is included below.
In addition, 2022 included a $30.9 million mark-to-market loss on derivative contracts entered into to hedge the purchase price of the APM Acquisition. Income taxes A reconciliation of the applicable U.S. federal statutory tax rate to the consolidated effective income tax rate from continuing operations along with a description of significant or other reconciling items is included below.
This was primarily driven by a net tax benefit of $56.2 million, 88.1%, in 2022 from federal and state capital loss deductions associated with an international affiliate's tax status change. We also recognized a tax benefit of $3.5 million, 5.5%, associated with earnings in foreign jurisdictions with statutory rates below the U.S. federal income tax rate.
The 2022 consolidated effective income tax rate from continuing operations was a benefit of 30.2%. We recognized a net tax benefit of 88.1% in 2022 from federal and state capital loss deductions associated with an international affiliate's tax status change.
The future cash flows are based on the Company's long-term strategic plan and a terminal value is used to estimate the reporting unit's cash flows beyond the period covered by the strategic plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise.
These analyses include estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount estimated cash flows. The future cash flows are based on the Company's long-term strategic plan, and a terminal value is used to estimate the reporting unit's cash flows beyond the period covered by the strategic plan.
(In millions) 2022 2021 Senior secured revolving credit facility due 2026 $ — $ — Senior secured term loan due 2026 423.6 605.3 Senior secured term loan due 2029 385.5 — 5.25% senior notes due 2023 — 598.6 5.75% senior notes due 2025 645.2 643.2 7.125% senior notes due 2030 714.9 — Other Debt 9.7 11.8 Total Debt $ 2,178.9 $ 1,858.9 Less short-term debt 2.2 8.6 Total long-term debt, net of current portion $ 2,176.7 $ 1,850.3 On August 10, 2022, the Company entered into an indenture with U.S.
(In millions) 2023 2022 Senior secured revolving credit facility due 2026 $ — $ — Senior secured term loan due 2026 — 423.6 Senior secured term loan due 2029 709.0 385.5 5.75% senior notes due 2025 647.2 645.2 7.125% senior notes due 2030 716.2 714.9 Other Debt 7.6 9.7 Total Debt $ 2,080.0 $ 2,178.9 Less short-term debt 9.5 2.2 Total long-term debt, net of current portion $ 2,070.5 $ 2,176.7 On August 16, 2023, the Company refinanced its senior secured term loans by amending its Credit Agreement (the Term Loan Amendment).
Sales and Operating Income 2022 versus 2021 (Dollars in millions) 2022 2021 Change % Change Sales: Color, Additives and Inks $ 2,355.0 $ 2,401.6 $ (46.6) (1.9) % Specialty Engineered Materials 1,044.4 911.6 132.8 14.6 % Corporate (2.5) 2.3 (4.8) nm Sales $ 3,396.9 $ 3,315.5 $ 81.4 2.5 % Operating income: Color, Additives and Inks $ 301.0 $ 303.1 $ (2.1) (0.7) % Specialty Engineered Materials 140.1 125.5 14.6 11.6 % Corporate (197.8) (148.9) (48.9) (32.8) % Operating income $ 243.3 $ 279.7 $ (36.4) (13.0) % nm - not meaningful Color, Additives and Inks Sales decreased $46.6 million, or 1.9%, in 2022 compared to 2021.
Sales and Operating Income 2023 versus 2022 (Dollars in millions) 2023 2022 Change % Change Sales: Color, Additives and Inks $ 2,007.4 $ 2,355.0 $ (347.6) (14.8) % Specialty Engineered Materials 1,138.2 1,044.4 93.8 9.0 % Corporate (2.8) (2.5) (0.3) nm Sales $ 3,142.8 $ 3,396.9 $ (254.1) (7.5) % Operating income: Color, Additives and Inks $ 259.9 $ 301.0 $ (41.1) (13.7) % Specialty Engineered Materials 142.5 140.1 2.4 1.7 % Corporate (205.6) (197.8) (7.8) (3.9) % Operating income $ 196.8 $ 243.3 $ (46.5) (19.1) % nm - not meaningful Color, Additives and Inks Sales decreased $347.6 million, or 14.8%, in 2023 compared to 2022, primarily driven by lower global demand and customer destocking.
We also recognized $1.9 million, 1.0%, of uncertain tax positions, primarily associated with European restructuring actions taken in 2021. 19 AVIENT CORPORATION Segment Information Operating income is the primary measure that is reported to our chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance.
Further, uncertain tax positions increased, which impacted the rate 12.9%, primarily associated with European restructuring charges which are not expected to realize and a tax effect of non-deductible foreign interest of 2.9%. 20 AVIENT CORPORATION Segment Information Operating income is the primary measure that is reported to our chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing their performance.
These analyses require the exercise of judgments, including judgments about appropriate discount rates, perpetual growth rates, revenue growth, and margin assumptions. A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors.
A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit.
Rebate programs offered are typically credited to customers for achieving defined volume levels. 23 AVIENT CORPORATION Environmental Liabilities We are a party to a Consent Decree related to remedial actions at the former Goodrich Corporation Calvert City site and will incur environmental remediation costs related to this matter.
Environmental Liabilities We are a party to a Consent Decree related to remedial actions at the former Goodrich Corporation Calvert City site and will incur environmental remediation costs related to this matter. We recognize an estimate of environmental liabilities on an undiscounted basis for probable future environmental expenditures.
For additional details relating to the financing, refer to Note 6, Financing Arrangements . Distribution business sale On November 1, 2022, Avient sold its Distribution business to an affiliate of H.I.G. Capital (the "Purchaser") for $950.0 million in cash, subject to a customary working capital adjustment.
Distribution business sale On November 1, 2022, Avient sold its Distribution business to an affiliate of H.I.G. Capital for $950.0 million in cash, subject to a customary working capital adjustment. Total proceeds were $935.5 million, of which $7.3 million was received in the year ended December 31, 2023.
The interest rates per annum applicable to the 2029 Term Loan under the Credit Agreement are either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 3.25% or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 2.25%.
The amendment aligned the maturity date for all of the Company’s term loan debt to August 29, 2029. The amendment also aligned and reduced the interest rates per annum, which now are either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 2.50%, or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 1.50%.
Additionally, the Company incurred $10.0 million of charges recognized within interest expense related to committed financing associated with the APM acquisition, along with $16.0 million of debt extinguishment costs. 18 AVIENT CORPORATION Other (expense) income, net Other expense, net increased $58.7 million in 2022 as compared to 2021 primarily due to the change in fair value of derivative contracts that we entered into to hedge the purchase price of the APM Acquisition of $30.9 million, and a $19.0 million year-over-year increase in the mark-to-market adjustment associated with pension and post-retirement plans.
Additional reductions resulted from $10.0 million of committed financing costs incurred in 2022 associated with the APM Acquisition along with a $13.7 million reduction in other debt financing costs. Other income (expense), net Other income (expense), net resulted in income in 2023 primarily related to a $32.3 million year-over-year change in the mark-to-market expense associated with pension and post-retirement plans.
(4) Purchase obligations are primarily comprised of service agreements related to telecommunication, information technology, utilities and other manufacturing plant services and certain capital commitments. Critical Accounting Policies and Estimates Significant accounting policies are described more fully in Note 1, Description of Business and Summary of Significant Accounting Policies , to the accompanying consolidated financial statements.
Critical Accounting Policies and Estimates Significant accounting policies are described more fully in Note 1, Description of Business and Summary of Significant Accounting Policies , to the accompanying consolidated financial statements. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S.
Financing Activities Net cash provided by financing activities in 2022 primarily reflects $1,300.0 million related to debt offering proceeds, which was offset by the repayment of long-term debt of $956.8 million, $86.8 million in dividends paid, $49.3 million of debt financing costs and the repurchase of common shares of $36.4 million. 21 AVIENT CORPORATION Total Debt The following table summarizes debt as presented at December 31, 2022 and 2021.
Financing Activities Net cash used by financing activities of $201.7 million in 2023 primarily reflects $105.8 million reduction in long-term debt and $90.2 million of dividends paid. 22 AVIENT CORPORATION Total Debt The following table summarizes debt as of December 31, 2023 and 2022.
Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely 24 AVIENT CORPORATION than not. The utilization of certain deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors, such as changes in tax laws.
Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not.
Cost of sales As a percent of sales, cost of sales increased from 71.5% in 2021 to 74.0% in 2022, primarily as a result of raw material inflation, restructuring costs and $34.4 million of inventory step-up amortization associated with the APM Acquisition. Selling and administrative expense These costs include selling, technology, administrative functions, corporate and general expenses.
Further, 2023 included $52.1 million of higher environmental remediation costs, while 2022 included $34.4 million of expense associated with the APM Acquisition purchase accounting inventory step-up and $19.2 million of higher restructuring costs. Selling and administrative expense These costs include selling, technology, administrative functions, amortization of intangible assets, corporate and general expenses.
Specialty Engineered Materials Sales increased by $132.8 million, or 14.6%, in 2022 compared to 2021, driven by a 14.6% increase from the APM Acquisition. Weaker foreign exchange rates and lower demand was offset by price increases associated with raw material inflation. Operating income increased by $14.6 million in 2022 compared to 2021, driven primarily by the acquisition of APM.
Operating income decreased $41.1 million, or 13.7%, in 2023 compared to 2022, primarily due to lower global demand, customer destocking and unfavorable foreign exchange rates, which had a 1.3% impact, partially offset by the carryforward of price increases, raw material deflation and cost reduction actions. Specialty Engineered Materials Sales increased by $93.8 million, or 9.0%, in 2023 compared to 2022.
Pursuant to the Term Loan Amendment, Avient, among other things, incurred a new tranche of Senior Secured Term Loan due 2029 (the 2029 Term Loan) in an aggregate principal amount equal to $575 million. The 2029 Term Loan was fully drawn on August 29, 2022, and the Company received proceeds of $537.6 million, net of financing costs and discounts.
Pursuant to the Term Loan Amendment, Avient incurred a new tranche of Senior Secured Term Loan due 2029 in an aggregate principal amount of $731.6 million. The proceeds, together with $102.3 million of cash on hand, were used to settle all of the outstanding principal of previous tranches of senior secured term loans.
In addition, we increased our valuation allowance by $9.9 million, 15.4%, for deferred tax assets that are unlikely to create income tax benefits before their expiration. Further, uncertain tax positions increased $8.1 million, 12.9%, primarily associated with European restructuring charges which are not expected to realize a tax benefit.
Offsetting these benefits in 2022 were the tax impact of international permanent items of 12.1%, which primarily included an unfavorable tax effect of withholding taxes. We also increased our valuation allowance, which impacted the rate 15.4%, for deferred tax assets that are unlikely to create income tax benefits before their expiration.
Investing Activities Net cash used by investing activities during 2022 of $504.0 million primarily reflects $1,426.1 million related to the APM Acquisition and capital expenditures of $105.5 million, which were offset by the net proceeds from the Distribution divestiture of $928.2 million and the settlement of foreign exchange derivatives of $93.3 million.
Investing Activities Net cash used by investing activities during 2023 of $94.2 million primarily reflects the impact of capital expenditures of $119.4 million, which were partially offset by the net proceeds from the sale of the Distribution business of $7.3 million, proceeds from plant closures of $7.6 million and other investing inflows of $10.3 million.
The model includes estimates of future cash flows, future growth rates, terminal value amounts, and the applicable weighted-average cost of capital used to discount those estimated cash flows.
These analyses include estimates of future cash flows that are based on the Company's long-term strategic plan and the applicable weighted-average cost of capital used to discount estimated cash flows. The primary inputs to these estimates require the exercise of judgements, including judgements about appropriate discount rates, revenue growth, royalty rates, and long-term growth rates.
Payment Due by Period (In millions) Total 2023 2024 2025 2026 2027 Thereafter Total debt (1) $ 2,216.3 $ 2.2 $ 2.2 $ 652.2 $ 427.4 $ 0.4 $ 1,132.0 Operating leases 58.2 18.4 11.7 7.1 5.2 4.4 11.4 Interest on long-term debt obligations (2) 795.4 165.9 154.5 135.8 86.9 84.1 84.1 Pension and post-retirement obligations (3) 74.4 9.3 7.3 7.5 7.4 7.4 35.5 Purchase obligations (4) 135.4 62.0 33.9 12.0 10.6 10.5 6.4 Total $ 3,279.7 $ 257.8 $ 209.6 $ 814.6 $ 537.5 $ 106.8 $ 1,269.4 (1) Total debt includes both the current and long-term portions of debt and capital lease obligations.
Payment Due by Period (In millions) Total Less than 1 Year 1-3 Years 3-5 Years More Than 5 Years Total debt (1) $ 2,110.5 $ 9.5 $ 667.4 $ 15.4 $ 1,418.2 Operating leases 69.5 20.3 23.9 13.0 12.3 Interest on debt obligations (2) 680.1 144.5 232.9 214.1 88.6 Pension and post-retirement obligations (3) 76.9 8.0 15.7 15.6 37.6 Purchase obligations (4) 124.5 65.1 33.0 19.5 6.9 Environmental obligations (5) 157.2 32.1 89.8 6.2 29.0 Total $ 3,061.5 $ 247.4 $ 972.9 $ 277.6 $ 1,563.6 (1) Total debt includes both the current and long-term portions of debt and capital lease obligations.
Interest expense, net Interest expense, net increased $44.6 million in 2022 as compared to 2021 due to new debt financing associated with the APM Acquisition and the impact of higher interest rates on our variable term debt.
Higher interest expense related to new debt incurred to finance the APM Acquisition and the impact of higher interest rates on our variable term debt was partially offset by $15.8 million of higher interest income from cash equivalents and cross-currency swaps.
Selling and administrative expense in 2022 decreased $24.7 million compared to 2021, as the impact from the APM Acquisition of $27.8 million was more than offset by weaker foreign exchange and lower compensation cost.
The APM Acquisition, which began to be reflected in results as of September 1, 2022, increased sales by 7.4%, which was more than offset by the impacts of lower global demand and customer destocking. In addition, unfavorable foreign exchange rates had a 0.8% impact.
These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The annual goodwill impairment test was performed using a qualitative analysis in 2022. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each indefinite-lived trade name.
Removed
We maintain our focus on sales growth with expanding margins, with a goal of offsetting economic headwinds in certain end markets and geographies, raw material volatility and logistics cost inflation.
Added
As of December 31, 2023, the AEPW had committed over $1.5 billion to help end plastic waste in the environment through investment in infrastructure, innovation, education, and clean-up activities.
Removed
Avient (i) incurred $575.0 million of borrowings under a new Senior Secured Term Loan due 2029 and (ii) issued $725.0 million aggregate principal of the 2030 Notes to finance a portion of the APM Acquisition. Avient subsequently used proceeds from the Distribution business sale and cash on hand to repay $950 million of debt in the fourth quarter of 2022.
Added
Gross Margin Gross margin as a percentage of sales was 28.4% in 2023 as compared to 26.0% in 2022. The gross margin improvement was driven primarily by favorable price and mix, including a full year of APM results in 2023, and raw material deflation.
Removed
Acquisitions increased sales by 4.0%, while foreign exchange negatively impacted sales 5.6%. The remaining increase was primarily a result of price increases associated with inflation, which more than offset lower global demand.
Added
Selling and administrative expense in 2023 increased $56.3 million compared to 2022, primarily driven by a full year of APM results and higher restructuring costs of $9.6 million in 2023. 19 AVIENT CORPORATION Interest expense, net Interest expense, net decreased $4.5 million in 2023 as compared to 2022.
Removed
Income taxes The Company is subject to taxation in the U.S. and numerous international jurisdictions.
Added
This lower rate was primarily driven by the recognition of tax benefits of 7.5% associated with tax impairments of investments in affiliates, driven in part from European restructuring actions. Further, we recognized a 5.4% tax benefit from federal and state capital losses associated with an international affiliate's tax status change in 2022.
Removed
In determining the effective income tax rate, the Company analyzes various factors, including annual earnings, the laws of taxing jurisdictions in which the earnings were generated, the impact of state and local income taxes, the ability to use tax credits, net operating loss carryforwards, and available planning alternatives.
Added
Finally, we recognized tax benefits from the reduction of uncertain tax positions as well as the U.S. R&D tax credit, which reduced the tax rate, 5.3% and 3.7%, respectively. Partially offsetting these benefits were non-deductible foreign interest, 5.3%, tax associated with foreign income repatriation, 3.9%, and an increase of our valuation allowance which impacted the rate 3.6%.
Removed
Discrete items, including the effect of changes in tax laws, statutory tax rates, and valuation allowances or other non-recurring tax adjustments are reflected in the period in which they occur as an addition to, or reduction from, the tax provision.
Added
We also recognized a tax benefit of 5.5% associated with earnings in foreign jurisdictions with statutory rates below the U.S. federal income tax rate. Further, the state and local tax benefit was 4.0%, driven by a U.S. tax loss.
Removed
We recognize the resulting tax on global intangible low-taxed income (GILTI) and the deduction of foreign-derived intangible income (FDII) as a period expense in the period in which the tax is incurred.
Added
The APM Acquisition, which began to be reflected in results as of September 1, 2022, increased sales by 24.2%, which was partially offset by the impacts of lower global demand and customer destocking.
Removed
Further, the state and local tax benefit was $2.6 million, 4.0%, driven by a U.S. tax loss. Offsetting these benefits in 2022 were international permanent items of $9.6 million, 15.0%, which primarily included an unfavorable tax effect of withholding taxes and nondeductible interest expense.
Added
Operating income increased by $2.4 million, or 1.7%, in 2023 compared to 2022, driven primarily by the APM Acquisition, raw material deflation and cost reduction actions, partially offset by lower global demand, customer destocking and unfavorable foreign exchange rates, which had a 1.7% impact.
Removed
For 2021, changes in valuation allowances of $5.3 million, 2.6%, related to losses in jurisdictions for which we do not expect to be able to realize the associated tax benefit.
Added
Corporate Costs increased $7.8 million, or 3.9%, in 2023 compared to 2022, primarily driven by $52.1 million of higher environmental remediation costs in 2023 and $8.1 million of higher mark-to-market costs associated with Avient deferred compensation plans, partially offset by lower acquisition related expense of $47.5 million, which includes $34.4 million of expense associated with the APM inventory step-up, and $9.6 million of lower restructuring costs in 2023. 21 AVIENT CORPORATION Liquidity and Capital Resources Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity.

… 25 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−3 removed4 unchanged
Biggest changeForeign currency exposure — We enter into intercompany transactions that are denominated in various foreign currencies and are subject to financial exposure from foreign exchange rate movement from the date a loan is recorded to the date it is settled or revalued. To mitigate this risk, we may enter into foreign exchange forward contracts and derivative instruments.
Biggest changeForeign currency exposure — We have exposure from both third-party and intercompany transactions that are denominated in various foreign currencies and are subject to financial exposure from foreign exchange rate movements. To mitigate this risk, we may enter into foreign exchange forward contracts and derivative instruments.
Gains and losses on these contracts generally offset gains and losses on the assets and liabilities being hedged. We face translation risks related to the changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date.
Gains and losses on these contracts generally offset gains and losses on the assets and liabilities being hedged. We also face translation risks related to the changes in foreign currency exchange rates. Amounts invested in our foreign operations are translated into U.S. dollars at the exchange rates in effect at the balance sheet date.
Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars. To mitigate a portion of this risk, we may enter into cross currency swaps. Gains and losses on these contracts generally offset gains and loss on the euro investment in our foreign entities.
Therefore, changes in exchange rates may either positively or negatively affect our net sales and expenses from foreign operations as expressed in U.S. dollars. To mitigate a portion of this risk, we may enter into cross currency swaps. Gains and losses on these contracts generally offset gains and loss on the euro investment in our foreign entities. 28 AVIENT CORPORATION
There would be no material impact on our interest expense or cash flows from either a 10% increase or decrease in market rates of interest on our outstanding variable rate debt as of December 31, 2022.
There would be no material impact on our interest expense or cash flows from either a 10% increase or decrease in market rates of interest on our outstanding variable rate debt as of December 31, 2023.
Removed
We entered into foreign currency forward contracts and cross-currency swaps in order to mitigate the potential impact of foreign currency exchange rate changes on the expected purchase price for the APM Acquisition.
Removed
During the period between when the contracts were entered into and the time the acquisition closed, changes in the value of these foreign currency derivative instruments were recognized through Other (expense) income, net . Upon the closing of the APM Acquisition, we settled the related foreign currency forward contracts.
Removed
The cross-currency swaps were then designated as a net investment hedge for the euro net assets of APM. 27 AVIENT CORPORATION

Other AVNT 10-K year-over-year comparisons