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Avient beat Q1 expectations with adjusted EPS of $0.83, as pricing and productivity gains offset weaker demand in several end markets and higher inflationary pressures. Adjusted EBITDA margins also improved slightly, and the company said first-half performance is tracking modestly ahead of plan.
Packaging was the standout end market, growing low single digits in the quarter and expected to accelerate in Q2 on stronger EMEA and Asia demand. Other markets were mixed to weak, with consumer, healthcare, defense, industrial, transportation and energy showing softer trends.
Avient kept its full-year guidance unchanged, projecting 2026 adjusted EBITDA of $555 million to $585 million and adjusted EPS of $2.93 to $3.17. Management cited ongoing uncertainty from inflation, supply chain volatility and customer buying patterns, but still expects more than $200 million in free cash flow.
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Avient (NYSE:AVNT) reported first-quarter 2026 adjusted earnings per share of $0.83, modestly ahead of the company’s expectations, as pricing and productivity actions helped offset softer demand in several end markets and rising inflationary pressure.
Chairman, President and Chief Executive Officer Ashish Khandpur said sales were generally in line with expectations, with market demand continuing trends seen in the fourth quarter, particularly in Color, Additives and Inks, the larger of Avient’s two business segments. Demand was subdued in January and February, but improved in March as customers accelerated purchasing to mitigate potential supply disruptions and inflation tied to the conflict in the Middle East.
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Khandpur said adjusted EBITDA margins expanded 20 basis points in the quarter, as productivity and cost controls more than offset wage inflation and incentive compensation resets. He also said Avient’s focus on cash generation and debt reduction in 2025 contributed favorably to first-quarter EPS growth.
Avient’s largest end market, packaging, which represents about 23% of company revenue, grew low single digits in the first quarter despite a strong comparison from roughly 7% growth in the first quarter of 2025. Khandpur said packaging demand was supported by share gains in food and beverage applications and new product innovations, including non-PFAS polymer processing aids for personal care and beauty applications, as well as low-outgassing and anti-static materials for films and tapes used in electronics packaging.
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For the second quarter, Avient expects mid- to high-single-digit growth in packaging, led by EMEA, its largest packaging market, where comparisons to the prior year are more favorable. Khandpur also pointed to strength in Asia, including share gains with local beverage makers tied to demand for sugar-free tea and other beverages in China, as well as momentum in post-consumer recycled packaging applications for health and beauty.
Other end markets were more mixed. Khandpur said consumer sales declined in the first quarter but are expected to return to low-single-digit growth in the second quarter, helped by easier comparisons. Healthcare grew low single digits in the first quarter, reflecting tough comparisons after double-digit growth in the year-ago period and some inventory rebalancing in drug delivery. Defense sales were flat due to order timing, though the company expects sequential and year-over-year growth in the second quarter. Building and construction grew mid-single digits, supported by share gains in commercial and data center infrastructure applications.
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Industrial, transportation and energy remained weaker, with first-quarter sales declining by roughly mid-single digits in each market. Avient expects those trends to continue into the second quarter, though with more modest declines.
Senior Vice President and Chief Financial Officer Jamie Beggs said Color, Additives and Inks organic sales declined 3% in the first quarter. Strength in healthcare and stable packaging demand was more than offset by subdued demand in consumer, transportation and industrial markets. Segment EBITDA margins improved 40 basis points, as pricing and productivity actions offset wage inflation and lower sales.
Specialty Engineered Materials organic sales were flat. Beggs said share gains in commercial building and construction applications offset lower sales in consumer, transportation and industrial end markets. Healthcare was affected by inventory rebalancing and strong prior-year comparisons, while defense was flat due to timing of customer orders. Segment EBITDA margins declined 40 basis points because of unfavorable mix, though productivity offset wage inflation.
Regionally, Beggs said U.S.-Canada sales declined 3%, as growth in building and construction and stable consumer and packaging demand were more than offset by defense order timing and slow transportation demand tied to domestic automotive production. EMEA organic sales fell 2%, primarily due to consumer, industrial and transportation weakness. Asia grew 2%, driven by packaging and telecommunications, while Latin America declined 6% after 17% growth in the prior-year quarter.
Khandpur said geopolitical events in the Middle East have increased volatility in market conditions and customer purchasing behavior. He said Avient has secured supply for the vast majority of its second-quarter raw material needs, though availability remains constrained for select items. The company expects any second-quarter impact from constraints to be immaterial.
During the question-and-answer session, Khandpur said raw material inflation is most pronounced in hydrocarbons, with increases ranging from 20% to 60% depending on the material and region. He said thermoplastic elastomers are up roughly 20% to 30%, while polyethylene and polypropylene are up roughly 20% to 60%. Specialty materials and minerals, including performance additives and titanium dioxide, are seeing high-single-digit increases. Freight costs are up close to 20%, he said.
Khandpur said Avient has moved aggressively on pricing and expects to remain net price positive each quarter this year. Beggs added that less than 5% of Avient’s agreements are indexed, giving the company flexibility to manage pricing on a purchase-order basis.
Avient maintained its full-year 2026 guidance, citing elevated uncertainty for the second half. The company expects adjusted EBITDA of $555 million to $585 million, representing 2% to 7% growth over the prior year, and adjusted EPS of $2.93 to $3.17, representing 4% to 12% growth. For the second quarter, Avient expects adjusted EPS of $0.89.
Beggs said Avient expects to generate more than $200 million of free cash flow in 2026, strengthening its balance sheet and increasing financial flexibility. She said working capital typically ranges between 13% and 14% of sales, and that first-quarter working capital use reflected normal seasonality.
Khandpur said first-half performance is tracking modestly ahead of expectations, but the company is not changing its full-year outlook because of uncertainty around customer purchasing patterns and potential pull-forward demand. He said March saw less than $5 million of pull-in tied to customers securing supply, roughly offset by delayed defense orders.
Avient also discussed a leadership change announced last week. Beggs will leave the company effective June 1 to pursue an opportunity outside Avient. Joe Di Salvo, currently Vice President, Treasurer and Investor Relations, will become CFO. Khandpur thanked Beggs for her six years of service and said Di Salvo brings 25 years of financial experience, including nearly 15 years at Avient.
Khandpur highlighted electronics and high-performance computing as one of Avient’s prioritized growth vectors. He said the company’s solutions are used in semiconductor wafer handling, carrier tapes, advanced connectors, optical fiber components and data center cabling. The business is expected to exceed $40 million in sales this year, adding about $10 million in 2026 and doubling over the last three years.
Khandpur said Avient will continue investing in strategic growth areas while controlling spending and headcount. He said the company has productivity plans in place to offset about $30 million of wage inflation this year and has additional cost actions available if market conditions worsen.
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.
The article "Avient Q1 Earnings Call Highlights" was originally published by MarketBeat.
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