Avient Q2 Earnings Call Highlights
Key Points
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- Avient reported strong second-quarter results: Adjusted EPS rose 20% to $0.96, beating expectations by $0.09, while organic sales increased 4.3% and adjusted EBITDA margins reached a record 18.3%.
- Asia drove growth and segment profitability improved: Asian organic sales surged 18%, while both Color, Additives and Inks and Specialty Engineered Materials expanded margins through pricing, favorable mix, productivity and stronger demand in electronics and high-performance computing.
- The company raised its 2026 outlook and continued deleveraging: Avient now expects adjusted EBITDA of $575 million to $603 million, adjusted EPS of $3.10 to $3.25 and free cash flow of $210 million to $230 million; it repaid $50 million of debt in the quarter and plans to reduce debt by $100 million to $150 million for the year.
Avient (NYSE:AVNT) reported second-quarter 2026 adjusted earnings per share of $0.96, which Chairman, President and CEO Ashish Khandpur said was $0.09 above expectations, as stronger-than-anticipated volume growth, pricing actions and productivity initiatives supported results.
Organic sales increased 4.3% from the prior-year quarter, while adjusted EBITDA rose by double digits. Adjusted EBITDA margin reached a record 18.3%, up 110 basis points year over year, and adjusted EPS increased 20% from the prior-year period. The company also generated sufficient cash flow to repay $50 million of debt during the quarter.
Khandpur said the results reflected “successful execution, managing inflation, and navigating supply chain disruptions” in what he characterized as a dynamic and volatile operating environment. He cited market-share gains, new product introductions and pricing as contributors to organic growth, including volume growth in both operating segments.
Asia Leads Regional Growth
Asia was a standout in the quarter, with organic sales rising 18% year over year, driven by electronics, high-performance computing and new functional-additives business. Both company segments posted double-digit organic growth in the region.
Chief Financial Officer Joe Di Salvo said the company generated 8% sequential organic revenue growth globally from the first quarter to the second quarter. Asia grew 20% sequentially, while the U.S. and Canada increased 7%. Europe and Latin America posted sequential organic growth of 3% and 12%, respectively.
While pricing contributed to the global performance, Di Salvo said growth in Asia and the U.S. and Canada exceeded the impact of pricing, which he said indicated improving underlying demand and continued share gains.
During the question-and-answer session, Khandpur said approximately one-quarter of the company’s 4.3% second-quarter organic growth came from volume and three-quarters came from price. He expects the contribution to shift toward volume through the year, with volume accounting for nearly 70% of growth by the fourth quarter and price contributing about 30%.
Khandpur said the company expects to remain net price positive in each quarter of 2026. He added that Avient does not expect a material reversal of the pricing it has implemented if raw-material costs decline, though pricing may factor into some customer negotiations.
Segment Margins Expand
Color, Additives and Inks reported 5% organic sales growth and 9% adjusted EBITDA growth, excluding foreign-currency translation. Segment adjusted EBITDA totaled $125 million, while adjusted EBITDA margin rose 80 basis points to 21.7%.
Di Salvo attributed the segment’s margin performance to volume-driven revenue growth, favorable product mix, pricing execution and productivity efforts.
Specialty Engineered Materials posted 3% organic sales growth, supported by high-performance computing, electronics and infrastructure-related applications. The segment generated adjusted EBITDA of $76 million, up 20% from a year earlier, while margin expanded 310 basis points.
Di Salvo said approximately 100 basis points of Specialty Engineered Materials’ margin expansion reflected the absence of about $3 million in planned maintenance expense incurred in the second quarter of 2025. The remaining expansion was split between price-mix benefits and productivity gains. The company expects the segment’s margin to improve by about 100 basis points year over year in the second half.
End-Market Trends Remain Mixed
Packaging, Avient’s largest end market at 23% of sales, grew at a double-digit rate in the second quarter. The company cited pricing, innovation and new business wins, including demand for non-PFAS polymer processing aids used in food, personal health and beauty packaging.
Khandpur said European rules expected or required in August 2026 related to food packaging are supporting demand for non-PFAS processing solutions. He also said multinational customers are seeking to reduce PFAS use even where regulations do not require it. The business remains small, at several million dollars this year, but Avient expects it to grow as customer qualification programs advance.
Consumer sales rose at a mid-single-digit rate, led by the U.S. and Asia. Building and construction delivered double-digit growth, aided by data-center and infrastructure investment as well as lightweight composite applications for residential markets. Defense activity improved during the quarter, and the company expects that business to grow at a mid- to high-single-digit rate for the year.
Healthcare was affected in the first half by customer inventory rebalancing in drug-delivery and remote-monitoring devices, though Avient expects growth to return in the second half, particularly in medical devices and equipment. Industrial returned to modest growth, led by Asia, while transportation remained weak amid lower vehicle production and softer marine demand.
Avient expects energy and telecom to grow at high-single-digit to double-digit rates in the third quarter, supported by high-performance computing, electronics and U.S. electrical-infrastructure projects.
Guidance Raised, Debt Reduction Continues
The company raised its full-year 2026 outlook for adjusted EBITDA, adjusted EPS and free cash flow. Avient now expects:
- Adjusted EBITDA of $575 million to $603 million;
- Adjusted EPS of $3.10 to $3.25 per share;
- Free cash flow of $210 million to $230 million; and
- Capital expenditures of $120 million to $130 million, reduced from a prior outlook of $140 million due primarily to project timing.
For the third quarter, Avient forecast adjusted EPS of approximately $0.80 per share, representing 14% growth from the prior-year quarter. Di Salvo said the company has greater visibility into the third quarter than the fourth quarter, when year-end seasonality, holiday timing and potentially lower net price benefits could affect results.
Avient repaid $50 million in debt during the second quarter, bringing debt reduction over the trailing 12 months to $200 million. The company expects total 2026 debt repayment of $100 million to $150 million and forecasts year-end net leverage of 2.2 times to 2.4 times.
Khandpur said that approaching the company’s leverage target creates additional flexibility for capital deployment, including further debt reduction, share repurchases and acquisitions, though he said there was nothing imminent to model.
About Avient (NYSE:AVNT)
Avient Corporation (NYSE: AVNT) is a global provider of specialized and sustainable polymer materials, delivering color, additive and engineered solutions to a wide range of industries. The company's core offerings include masterbatches, colorant systems, compounds and resins designed to enhance performance, aesthetics and environmental sustainability. Avient serves markets such as packaging, automotive, consumer goods, healthcare, electronics, and agriculture, tailoring products to meet stringent regulatory and end-use requirements.
Formed through a corporate rebranding in 2020 following the divestiture of PolyOne's specialty businesses, Avient traces its heritage to a legacy of polymer innovation spanning decades.
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