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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.00pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.20pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.19pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+4
negatively+4
failure+4
adverse+2
claims+2
Positive rising
innovation+1
greater+1
best+1
strong+1
effective+1
Risk Factors (Item 1A)
3,685 words
ITEM 1A. RISK FACTORS
The following are certain risk factors that could affect our business, results of operations, financial position or cash flows. Although the risks are organized by headings and each risk is described separately, many of the risks are interrelated. These risk factors should be considered along with the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results or financial condition to differ materially from those projected in forward-looking statements. The following discussion is not an all-inclusive listing of risks, although we believe these are the more material risks that we face. If any of the following occur, our business, results of operations, financial position or cash flows could be adversely affected.
Global Operating Risks
Our operations have in the past been and could in the future be adversely affected by various risks inherent in conducting operations worldwide.
We conduct a substantial portion of our business outside the U.S., with approximately 61% of our sales outside the U.S. We also have many facilities located outside the U.S., as detailed in Item 2, “Properties.” Accordingly, our business is subject to risks related to the differing legal, political, social and regulatory requirements, and economic conditions of many jurisdictions. Risks inherent in international operations include, but are not limited to, the following:
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+1
cease+1
unpaid+1
impairments+1
injury+1
Positive rising
favorable+2
gain+1
excellence+1
progress+1
achieve+1
MD&A (Item 7)
4,953 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide information that is supplemental to, and should be read together with, our consolidated financial statements and the accompanying notes contained in this Annual Report on Form 10-K. Information in this Item 7 is intended to assist the reader in obtaining an understanding of our consolidated financial statements, the changes in certain key items in those financial statements from year to year, the primary factors that accounted for those changes, and any known trends or uncertainties that we are aware of that may have a material effect on our future performance, as well as how certain accounting principles affect our consolidated financial statements. 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 2025 and 2024. For a discussion of changes from fiscal year 2024 to fiscal year 2023, 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, 2024, filed with the SEC on February 18, 2025.
The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. 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 “ Note on Forward-Looking Statements ” and Item 1A, “ Risk Factors .”
• 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;
• compliance with international trade laws and regulations, including tariffs, export control and economic sanctions, and other trade barriers;
• 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;
• 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.
We could be adversely affected by violations of the FCPA, UK Bribery Act and similar worldwide anti-bribery laws, as well as export controls and economic sanction laws. As a global company, we operate in many parts of the world that have experienced governmental corruption. While we have no basis to believe such actions are occurring, if we are found to be liable for FCPA, UK Bribery Act, export control or sanction violations, we could suffer from criminal or civil penalties or other sanctions, including loss of export privileges or authorization needed to conduct aspects of our international business, which could have a material adverse effect on our business. We have robust policies that require compliance with all laws and regulations and we strictly enforce those policies. However, it is always possible an employee's or agent's unlawful actions may avoid detection.
Any of these risks could have an adverse effect on our international operations by reducing demand for our products.
7 AVIENT CORPORATION
Changes to foreign trade policy, including new or increased tariffs and changing import/export regulations, could adversely affect our operating results, and the impacts could be material.
Changes in foreign trade policy, regulatory or economic conditions or in laws governing international trade could materially adversely affect our business. The U.S. has instituted certain changes, and may propose additional changes, in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on goods exported from the U.S. or imported into the U.S., and other government regulations affecting trade between the U.S. and other countries (such as Canada, Mexico, China, and the European Union) where we conduct our business. Global trade disruption or significant introduction of trade barriers, together with any future downturns in the global economy, could further materially and adversely affect our financial performance.
As a result of policy changes and government proposals, there may be greater restrictions and economic disincentives on international trade. The new tariffs and other changes in U.S. trade policy have triggered retaliatory actions by affected countries, and foreign governments have instituted or are considering imposing tariffs and trade sanctions. Such changes have the potential to adversely impact the global economy, our industry and the global demand for our products, and as a result, could have a negative impact on our business, financial condition and results of operations.
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.
Several factors have in the past and may in the future affect the demand for and supply of of products and services, including:
• economic downturns, inflation or other uncertainty or 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 customer confidence and demand, and our customers’ ability to pay amounts owed to us;
• changes in environmental regulations that limit our ability to purchase materials or sell our products and services in specific markets;
• changes in demand for, and 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 or insolvency, supply shortages, plant outages or regulatory changes that may limit or prohibit overland transportation of certain hazardous materials and exogenous factors, like severe weather.
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.
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.
The occurrence of an operating problem at our facilities may have a material adverse effect on the productivity and profitability of a particular manufacturing facility, or on our operations as a whole, during and after the period of these operating difficulties. Operating problems may cause personal injury and/or loss of life, customer attrition and severedamage to or destruction of property and equipment and environmental damage. Our property and casualty insurance, which we believe are of the types and in the amounts that are customary for the industry, may not fully insure us against all potential hazards that are incident to our business or otherwise could occur.
8 AVIENT CORPORATION
Environmental, health and safety laws and regulations impact our operations and financial statements.
Our operations on, and ownership of, real property are subject to environmental, health and safety laws and regulations at the national, state and local governmental levels (including, but not limited to, the Regulation, Evaluation, Authorization, and Restriction of Chemicals (REACH), the Classification, Labeling, and Packaging Regulation (CLP), Restriction of Hazardous Substances (RoHS) and the Consumer Product Safety Improvement Act of 2008). The nature of our business exposes us to compliance costs and risks of liability under these laws and regulations due to the production, storage, transportation, recycling or disposal and/or sale of materials that can cause contamination and other harm to the environment or personal injury if they are improperly handled and released. 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.
Our accruals for such costs and associated liabilities are subject to changes in estimates on which the accruals are based. For example, any amounts accrued for environmental matters reflect the best information available and our assumptions about remediation requirements at the applicable site, the nature of the remedy, the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites. Changes in estimates on which accruals are based, unanticipated government actions, or changes in health, safety, environmental or chemical control regulations could result in higher costs.
Electricity, fuel, logistics and raw material availability and costs have in the past and could in the future 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. Electricity and raw materials costs represent a substantial part of our manufacturing costs. We source certain strategic raw materials that may be difficult to replace or for our customers to requalify, which could result in the need to accept price increases. 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. Other external factors beyond our control, including, but not limited to, trade barriers due to geopolitical tensions, can also cause fluctuations in raw materials prices, which could negatively impact demand for our products and cause volatility in our results.
Increased competition can negatively impact sales, earnings and cash flow performance.
We encounter competition in price, payment terms, delivery, service, performance, product innovation, product recognition and quality, depending on the product involved. Avient's operating results depend, in part, on continued successful research, development, and marketing of new products, and some of such efforts may not come to fruition or may be delayed.
We expect that our competitors will continue to develop and introduce new and enhanced products, which could cause a decline in the market acceptance of our products. In addition, our competitors could cause a reduction in the selling prices of some of our products as a result of intensified price competition. Competitive pressures could also result in the loss of customers.
Cybersecurity breaches, global information systems security threats and computer crime pose a risk to our systems, networks and products, which could harm our business.
We depend on integrated information systems to conduct our business, including communicating with employees and customers, ordering and managing materials from suppliers, shipping products to customers, and analyzing and reporting results of operations. Avient's IT capabilities are delivered through a combination of internal and external services and service providers. In addition, some of our systems, tools and resources use, integrate, or will integrate some form of artificial intelligence (AI), which has the potential to result in bias, miscalculations, data errors, and intellectual property infringement, and introduces additional risk associated with unauthorized access to our intellectual property, data security events, and disruption to our business. Further, we store sensitive data, including proprietary business information, intellectual property and confidential employee or other personal data, on our servers and databases.
9 AVIENT CORPORATION
Cybersecurity breaches, global information systems security threats and more sophisticated and targeted computer crime, including from threat actors who are increasingly leveraging AI for cyberattacks, pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data and communications. We continue to update our infrastructure, security tools, employee training and processes to protect against security incidents, including both external and internal threats, and to prevent their recurrence; however, our systems, networks and products may nevertheless be vulnerable to advanced persistentthreats or other types of system failures. 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. 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 currently involved in various legal proceedings, and may be subject to future claims or other liability that could negatively impact our business and results of operations.
From time to time, we are involved in various legal proceedings or in commercial disputes and other legal and regulatory proceedings related to our business. Additionally, our development, manufacture and sale of specialty materials, including those sold to medical, automotive, consumer packaging, and construction end markets, involves risk of exposure to product liability claims, warranty claims, product recalls and related adverse publicity. While management establishes reserves based on assessments of the contingencies related to legal claims asserted against the Company, subsequent developments may affect such assessments and our estimates of the loss contingency and require payments in excess of the Company's reserves. An adverse judgment or significant product liability, warranty, or recall action could result in substantial expenditures, affect consumer confidence in our products and divert management's attention from other matters. While we maintain product liability insurance, insurance coverage may not be adequate.
Failure to develop new products and protect our intellectual property could negatively impact our future performance and growth.
Innovation and product development are foundational to our strategy and important to our future growth. Failure to create or acquire new technologies and new products could negatively impact our ability to deliver strong financial results. We may face challenges in customer qualification and adoption of new technologies, and failure of our products to work as predicted could lead to liability and damage to customer relationships and our reputation. We continually apply for and obtain U.S. and foreign patents to protect the results of our research and development efforts. Failure to protect our intellectual property could negatively affect our future performance and growth.
We are subject to risks associated with climate change and climate change legislation, regulation and international agreements.
Carbon emissions have become the subject of state and local, regional, national, and international attention. Concerns about climate change have resulted and may continue to result in the imposition of additional regulations or restrictions to which we may become subject. These regulatory developments related to climate change and climate disclosure and diligence, including the Corporate Sustainability Reporting Directive, could increase our operating and compliance costs, thereby impacting our business and consolidated financial statements.
From time to time, we establish strategies and expectations related to climate change and other environmental matters. Our ability to achieve any such strategies or expectations is subject to numerous factors and conditions, many of which are outside of our control. Examples of such factors include, but are not limited to, evolving legal, regulatory, and other standards, processes, and assumptions, the pace of scientific and technological developments, increased costs, the availability of requisite financing, and changes in carbon markets. Failures 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
Fluctuation of foreign currency exchange rates may adversely impact our financial results.
We conduct business in various regions throughout the world and are therefore exposed to fluctuations in foreign currency exchange rates in relation to the U.S. dollar. Any significant change in the value of the currencies of the countries in which we do business against the U.S. dollar, whether precipitated by governmental monetary policy or otherwise, could affect our ability to sell products competitively and control our cost structure, which could have a material adverse effect on our business, financial condition and results of operations. Further, because our Consolidated Financial Statements are presented in U.S. dollars, increases or decreases in the value of the U.S. dollar relative to other currencies in which we conduct business have in the past and could in the future adversely impact our financial results. For additional detail related to this risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk."
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.
Global credit and financial markets experience volatility, including volatility in security prices, liquidity and credit availability, declining valuations of certain investments and significant changes in the capital and organizational structures of certain financial institutions. Market conditions may limit our ability to access the capital necessary to grow and maintain our business. 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.
The agreements governing our debt, including our revolving credit facility, term loan and other debt instruments, contain various covenants that limit our ability to take certain actions and in certain circumstances require us to meet financial maintenance tests, failure to comply with which could have a material adverse effect on us.
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.
In addition, depending on our level of borrowing, our revolving credit facility requires us to comply under certain circumstances with specific financial tests, under which we are required to achieve certain or specific financial and operating results. Our ability to comply with these provisions may be affected by events beyond our control. A breach of any of these covenants would result in a default under such agreements and instruments, which in certain circumstances could be a default under all of these agreements and instruments. In the event of any default, our lenders could elect to declare all amounts borrowed under the agreements, together with accrued interest thereon, to be due and payable. In such event, we cannot assure that we would have sufficient assets to pay debt then outstanding under the agreements governing our debt.
Furthermore, certain of these agreements condition our ability to obtain additional borrowing capacity, engage in certain transactions or take certain other actions, on our achievement of certain or specific financial and operating results, although our failure to achieve such results would not result in a default under such agreements. Any future refinancing of our senior secured revolving credit facility or other debt may contain similar restrictive covenants.
Our ability to service long-term indebtedness requires cash.
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. Prevailing economic conditions and financial, business, competitive, legislative, regulatory and other factors, many of which are beyond our control, affect our ability to make these payments. While we believe that cash flow from our current level of operations, available cash and available borrowings under our revolving credit facility provide adequate sources of liquidity, a significant drop in operating cash flow resulting from economic conditions, competition or other uncertainties beyond our control could create the need for alternative sources of liquidity. 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.
As of December 31, 2025, we had goodwill of $1,757.6 million. The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with customers, strategic decisions made in response to economic or competitive conditions could result in goodwill impairment charges, which could adversely impact our results of operations. For additional information on the results of our annual impairment testing, see Note 2, 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 .”
Avient may be subject to risks relating to changes in tax rates, changes in global tax laws and regulations, or exposure to additional income tax liabilities.
Avient is subject to income taxes in many jurisdictions around the world. Income tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be affected materially by changes in the mix among earnings in countries with differing statutory tax rates, changes in the valuation allowance of deferred tax assets, or changes in tax legislation, regulations, and policies. The amount of income taxes paid is subject to ongoing audits and litigation by tax authorities in the countries in which we operate. If these audits and/or litigation result in assessments different from amounts reserved, future financial results may include material unfavorable adjustments to our tax liabilities and cash taxes.
Cautionary
Our Business
We are an innovator of materials solutions to help our customers succeed, while enabling a sustainable world. Our products include specialty engineered materials, performance fibers, advanced composites, and color and additive solutions. We are also a highly specialized developer and manufacturer of performance enhancing additives, liquid colorants and silicone colorants. Headquartered in Avon Lake, Ohio, with 2025 sales of $3.3 billion, we have manufacturing and warehouses around the globe, with 61% of our sales to customers outside the United States. We provide value to our customers through our ability to link our knowledge of polymers and materials science with our manufacturing and supply chain capabilities to provide value-added solutions to designers, assemblers and processors of materials.
Strategy and Key Trends
In 2024, we unveiled Avient's new strategic direction guided by our purpose: to be an innovator of materials solutions to help our customers succeed, while enabling a sustainable world. We seek to achieve this with a two-pronged strategic approach: 1) building new platforms of scale, to play bigger and bolder in high-growth markets, and 2) catalyzing our core business, to maximize the impact of our existing portfolio. We have identified growth vectors — specific markets and applications targeted for above-market growth — in both accelerating markets and in our core business, by intersecting secular trends with our technologies.
We seek to operationalize our strategy using four strategic drivers: Portfolio Prioritization; Amplify Innovation; Digital for Operational Excellence and Growth; and Leadership, Talent, and Culture for the Avient of the Future. Our strategy builds upon Avient's foundational strengths refined over our history: unwavering customer focus; global reach with a local touch; diverse technology portfolio; commercial excellence; financial rigor and prudence; and a culture of safety and sustainability. The safety and health of our employees remain top priorities, and our ultimate goal is to operate injury-free.
In 2025, we made significant progress implementing our new strategy. Our growth vector sales are outpacing the rest of the Company, with defense and healthcare leading the way. Internal R&D collaboration has increased, resulting in technology sharing across businesses and geographies. We have bolstered digital capabilities with a focus on pilot projects designed to improve speed and efficiency. We continued to foster the culture needed to execute our strategy, and to build our talent pipeline by promoting leaders from within while bringing in external expertise as needed.
18 AVIENT CORPORATION
Results of Operations
Variances — Favorable (Unfavorable)
2025 versus 2024
(Dollars in millions, except per share data)
Change
Change
Sales
Cost of sales
Gross margin
Selling and administrative expense
Operating income
Interest expense, net
Other income, net
Income from continuing operations before income taxes
Income tax expense
Net income from continuing operations
Loss from discontinued operations, net of income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to Avient common shareholders
Earnings per share attributable to Avient common shareholders - basic:
Earnings per share attributable to Avient common shareholders - diluted:
Gross margin as a percentage of sales
nm - not meaningful
Sales
Sales increased $19.8 million, or 0.6%, in 2025 compared to 2024. Favorable foreign currency impacts were 0.9%, while sales, excluding the impacts of foreign exchange, decreased 0.3%. The sales decline was primarily within the consumer, industrial and energy end markets, partially offset by sales increases in the healthcare, defense and telecommunications end markets.
Gross Margin
Gross margin decreased to 31.2% from 32.6% in 2025 compared to 2024, primarily driven by higher restructuring charges of $22.2 million and higher operating costs, which included planned maintenance in the second quarter of 2025. Further, in 2024, Avient recognized a gain from insurance recoveries associated with previously incurred environmental remediation costs of $34.7 million as compared to a gain of $2.0 million in 2025. This was partially offset by lower environmental remediation charges of $11.6 million.
Selling and administrative expense
These costs include selling, technology, administrative functions, amortization of intangible assets, corporate and general expenses. Selling and administrative expense in 2025 increased $84.7 million compared to 2024, primarily driven by an impairment charge of $71.6 million associated with the Company's decision to cease development of the cloud-based enterprise resource planning system, S/4HANA, charges of $14.7 million associated with unpaid contractual obligations for hosting fees, and higher restructuring charges of $21.7 million. These charges were partially offset by productivity initiatives and lower incentive compensation cost.
Interest expense, net
Interest expense, net decreased $7.0 million in 2025 as compared to 2024, primarily driven by the benefit of reduced interest rates resulting from previous refinancing activity, in addition to prepayments totaling $150.0 million made on our senior secured term loan throughout 2025.
19 AVIENT CORPORATION
Other income, net
Other income, net increased $5.7 million in 2025 as compared to 2024, primarily associated to a $5.4 million increase in mark-to-market income associated with pension and post-retirement plans.
Income taxes
The 2025 consolidated effective tax rate was 25.2% compared to 24.1% in 2024. The higher tax rate was primarily attributable to higher Global Intangible Low-tax Income (GILTI) and Subpart F income and increases in valuation allowances. These increases were partially offset by the tax effects of intercompany transactions, including statutory impairments and the intercompany sale of intellectual property. Refer to Note 11 - Income Taxes for further detail, including a rate reconciliation.
Segment Information
Operating income is the primary segment performance measure that is reported to our chief operating decision maker (CODM), which is the Company's chief executive officer. Our CODM utilizes this measure to determine appropriate resource allocations to our segments in the annual planning process and to periodically assess segment performance, primarily by evaluating actual results in comparison to the annual operating plan and forecast. Operating income at the segment level does not include corporate general and administrative expenses that are not allocated to segments, restructuring charges, share-based compensation costs, environmental remediation costs and associated recoveries, asset impairments, acquisition-related charges, mark-to-market adjustments on pension and other post-retirement obligations, and certain other items that are not included in the measure of segment profit or loss that is reported to and reviewed by our CODM. These costs are included in Corporate .
Avient has two reportable segments: (1) Color, Additives and Inks and (2) Specialty Engineered Materials. Our segments are further discussed in Note 13, Segment Information , to the accompanying consolidated financial statements.
Sales and Operating Income
2025 versus 2024
(Dollars in millions)
Change
% Change
Sales:
Color, Additives and Inks
Specialty Engineered Materials
Corporate
Total sales
Operating income:
Color, Additives and Inks
Specialty Engineered Materials
Corporate
Total operating income
Color, Additives and Inks
Sales decreased $12.3 million, or 0.6%, in 2025 compared to 2024. Favorable foreign currency impacts were 1.0%, while sales, excluding the impacts of foreign exchange, decreased 1.6%. The sales decrease was primarily within the consumer, building and construction, industrial and transportation end markets, partially offset by growth in the healthcare end market.
Operating income increased $5.1 million, or 1.7%, in 2025 compared to 2024. The increase was primarily driven by improved mix and cost savings from productivity and restructuring actions, in addition to lower incentive compensation cost.
Specialty Engineered Materials
Sales increased $34.5 million, or 2.9%, in 2025 compared to 2024. Favorable foreign currency impacts were 0.9%, while sales, excluding the impacts of foreign exchange, increased 2.0%. The sales increase was primarily within the healthcare, defense and telecommunications end markets, partially offset by declines in the industrial, consumer and energy end markets.
20 AVIENT CORPORATION
Operating income decreased by $3.6 million, or 2.2%, in 2025 compared to 2024. The increase in sales was more than offset by higher operating costs, including costs associated with planned maintenance in the second quarter of 2025, raw material inflation, and investments in the Company's growth vectors.
Corporate
Corporate costs increased $127.3 million in 2025 compared to 2024, primarily driven by an impairment charge of $71.6 million associated with the Company's decision to cease development of the cloud-based enterprise resource planning system, S/4HANA, charges of $14.7 million associated with unpaid contractual obligations for hosting fees, and higher restructuring costs of $43.9 million. Further, in 2024, Avient recognized a gain from insurance recoveries associated with previously incurred environmental remediation costs of $34.7 million as compared to a gain of $2.0 million in 2025. This was partially offset by lower environmental remediation charges of $11.6 million in 2025, lower incentive compensation cost, and benefits from productivity initiatives.
Liquidity and Capital Resources
Our objective is to finance our business through operating cash flow and an appropriate mix of debt and equity. 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 on hand 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. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved have been and may continue to be material.
The following table summarizes our liquidity as of December 31, 2025:
(In millions)
Cash and cash equivalents
Revolving credit availability
Liquidity
As of December 31, 2025, 76% of the Company’s cash and cash equivalents resided outside the United States.
Based on current projections, we believe that we will be able to continue to manage and control working capital, discretionary spending and capital expenditures and that cash provided by operating activities, along with available borrowing capacity under our revolving credit facilities, will allow us to maintain adequate levels of available capital to fund our operations, meet debt service obligations, continue paying dividends, and pay down debt and/or opportunistically repurchase outstanding common shares for at least twelve months and the foreseeable future thereafter.
Expected sources of cash needed to satisfy cash requirements in 2026 include our cash on hand, cash from operations and available liquidity under our revolving credit facility, if necessary. Expected uses of cash in 2026 include interest payments, cash taxes, dividend payments, debt repayment, share repurchases, environmental remediation payments and capital expenditures. Capital expenditures are currently estimated to be approximately $140 million in 2026, primarily to support organic sales growth and other strategic investments.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities:
(In millions)
Cash provided by (used by):
Operating Activities
Investing Activities
Financing Activities
Effect of exchange rate on cash
Net decrease in cash and cash equivalents
21 AVIENT CORPORATION
Operating Activities
Net cash provided by operating activities increased to $301.6 million in 2025, as compared to $256.8 million in 2024, driven primarily by insurance proceeds of $34.0 million for previously incurred losses at the Calvert City site, a $23.0 million reduction in pension, retirement benefits and deferred compensation plan obligations, primarily associated with 2024 benefit payments for executive retirements, and a $17.9 million decrease in environmental remediation payments. This was partially offset by higher incentive payments in 2025 associated with 2024 performance and increased working capital.
Investing Activities
Net cash used by investing activities during 2025 of $97.0 million primarily reflects the impact of capital expenditures of $106.6 million, which were partially offset by proceeds from plant closures of $12.9 million.
Financing Activities
Net cash used by financing activities of $257.1 million in 2025 primarily reflects repayment on long-term borrowings of $150.3 million and $98.8 million of dividends paid.
Total Debt
The following table summarizes debt as of December 31, 2025 and 2024.
(In millions)
Senior secured revolving credit facility
Senior secured term loan due 2029
7.125% senior notes due 2030
6.250% senior notes due 2031
Other Debt
Total Debt
Less short-term debt
Total long-term debt, net of current portion
On March 12, 2025, the Company refinanced its senior secured term loan by amending the credit agreement governing such term loan (the Term Loan Amendment). The Term Loan Amendment reduced the interest rate per annum by 25 basis points, which now is either (i) Adjusted Term SOFR (as defined in the Term Loan Amendment) plus 1.75%, or (ii) a Base Rate (as defined in the Term Loan Amendment) plus 0.75%. The maturity date and other terms and conditions are substantially the same as the terms and conditions under the credit agreement immediately prior to the Term Loan Amendment.
During 2025, the Company made voluntary prepayments of $150.0 million on its senior secured term loan, which were applied to the principal installments in direct order of maturity. These prepayments were made without penalty or premium.
On June 12, 2025, the Company entered into a revolving credit agreement (the Revolving Credit Agreement) with various financial institutions as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, which replaced our previous credit agreement set to mature in 2026. The Revolving Credit Agreement provides for a senior secured revolving credit facility of up to $500.0 million, which may be increased by up to $250.0 million, subject to certain conditions. Loans under the Revolving Credit Agreement will mature on June 12, 2030. The Revolving Credit Agreement contains representations and warranties, affirmative covenants, negative covenants and events of default that are substantially similar to those contained in the Company's existing term loan credit agreement.
As of December 31, 2025 and 2024, we had no borrowings outstanding under our Revolving Credit Facility. As of December 31, 2025, remaining availability under our Revolving Credit Facility was $490.3 million.
As of December 31, 2025, we were in compliance with all customary financial and restrictive covenants pertaining to our debt. For additional information regarding our debt, please see Note 4, 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, $9.7 million of which was used at December 31, 2025. These letters of credit are issued by the bank in favor of third parties and are mainly related to required insurance programs.
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Material Cash Requirements
We have future obligations under various contracts relating to debt and interest payments, operating leases, pension and post-retirement benefit plans, purchase obligations and environmental remediation obligations. The following table summarizes our obligations as of December 31, 2025 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.
Payment Due by Period
(In millions)
Total
Less than 1 Year
1-3 Years
3-5 Years
More Than 5 Years
Total debt
Operating leases
Interest on debt obligations (1)
Pension and post-retirement obligations (2)
Purchase obligations (3)
Environmental remediation obligations
Total
(1) Represents estimated contractual interest payments for all outstanding debt. Excludes cash receipts from cross-currency swaps as described in Note 14, Derivatives and Hedging .
(2) This represents estimates related to the funding obligations of our pension and other post retirement plans. These contributions are based on actuarial estimates of future assumed payments based upon retirement and payment patterns for a 10-year period. The estimates in the table may differ materially from actual future payments due to uncertainties regarding the assumptions involved in estimating future required contributions to our pension and non-pension post retirement benefit plans, including (i) interest rate levels (ii) the amount and timing of asset returns and (iii) what, if any, changes may occur in pension funding legislation.
(3) 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. 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. The application of these critical accounting policies involves the exercise of judgment and use of assumptions for future uncertainties. Accordingly, actual results could differ significantly from these estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are the most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective and complex judgments.
Revenue Recognition
Sales are recognized when control of promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services, which is typically when products are shipped from our facilities. The majority of the Company’s sales agreements contain performance obligations satisfied at a point in time when control is transferred to the customer. 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.
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. 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. 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.
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Environmental liabilities represents our best estimate of the remaining probable costs based upon information and technology currently available. Depending upon the results of future testing, the ultimate remediation alternatives undertaken, changes in regulations, new information, newly discovered conditions and other factors, it is reasonably possible that we could incur additional costs in excess of the amount accrued. However, such additional costs, if any, cannot currently be estimated. 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. Adjustments have been material to our financial statements in the past and it is reasonably possible that they could be in the future.
Additional information related to the accounting for environmental liabilities is found in Note 10, Commitments and Contingencies .
Pension Benefit Plans
The measurement of liabilities related to pension benefit plans is based on assumptions related to future events including interest rates, return on plan assets, and mortality assumptions. We immediately recognize actuarial gains and losses in our operating results in the year in which the gains or losses occur.
Asset returns and interest rates significantly affect the value of assets and liabilities related to our pension plans and therefore the funded status of our plans. It is difficult to predict these factors due to the volatility of market conditions. To develop our discount rate, we consider the yields of high-quality corporate bonds with maturities that correspond to the timing of our benefit obligations, referred to as the bond matching approach. To develop our expected long-term return on plan assets, we consider forward looking long-term asset returns and the expected investment portfolio mix of plan assets. Life expectancy is another significant assumption that impacts our pension 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 9, Employee Benefit Plans .
Income Taxes
We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely 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.
We recognize net tax benefits under the recognition and measurement criteria, which prescribes requirements and other guidance for financial statement recognition and measurement of positions taken or expected to be taken on tax returns. We recognize an income tax benefit from an uncertain tax position only if it is more likely than not that the benefit would be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company evaluates and adjusts the amount of unrecognized income tax benefits based on changes in law, facts and circumstances. We record interest and penalties related to uncertain tax positions as a component of income tax expense. The ultimate resolution of unrecognized income tax benefits is often dependent upon uncontrollable factors such as the timing of finalizing resolutions of audit disputes through reaching settlement agreements, or changes in law.
Additional information related to the accounting for income taxes is found in Note 11, Income Taxes .
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. 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.
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Additionally, goodwill is evaluated for impairment whenever an event occurs or circumstances change that would indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Events or circumstances that may result in an impairment review include changes in macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price.
Quantitative analyses are performed by estimating the fair value for each reporting unit using a discounted cash flow model. 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. 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 require the exercise of judgments, including judgments about appropriate discount rates, revenue growth, operating margins, and long-term growth rates.
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.
In 2025, the annual goodwill impairment test was performed using a qualitative analysis with the exception of certain reporting units where management elected to bypass the qualitative analysis and perform a quantitative analysis. Based on the analyses performed in 2025, the fair value of the Company's reporting units continues to exceed their respective carrying amounts, and accordingly, no impairment charges were recognized.
Indefinite-lived Trade Names
Indefinite-lived trade names are evaluated annually for impairment as of October 1 using either a quantitative or qualitative analysis to determine whether their fair values exceed their respective carrying amounts. 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. 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 trade names.
Quantitative analyses are performed by estimating the fair value for each indefinite-lived trade name using a royalty relief methodology. 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 judgments, including judgments about appropriate discount rates, revenue growth, royalty rates, and long-term growth rates.
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.
In 2025, the indefinite-lived trade names impairment tests were performed using a qualitative approach. Based on this qualitative assessment, management concluded that the fair values of the Company's indefinite-lived trade names continued to exceed their carrying values, and accordingly, no impairment charges were recognized.
For additional information about goodwill and intangible assets see Note 2, Goodwill and Intangible Assets .
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.
