Avient Corporation (AVNT) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Avient's first-ever Sustainability Day. I'm Joe Di Salvo, Vice President, Treasurer and Investor Relations. For the last several years, we focused on our 4 key growth drivers, of which sustainable solutions is the largest representing one third of the company ales. So today, we're excited to share with you why this has been and will continue to be a growth driver for the company. In a moment, Bob Patterson, our Chairman, President and CEO, will provide some opening remarks, then Jamie Beggs our CFO, will provide an overview of the company and who we've become as Avient. Walter Ripple, our Vice President of Sustainability will discuss the emerging trends driving the growth of our sustainable solutions portfolio, and then each of our segment presidents will provide specific product examples of how our customers rely on our material science know-how to achieve their sustainability goals. At the end, we'll have a Q&A session, [Operator Instructions] I'd like to remind everyone that we'll be making forward-looking statements and using non-GAAP financial measures. We also have certain pro forma information for 2020 and 2022 to reflect the Clariant and Dyneema acquisitions as if they occurred at the beginning of the year acquired. Please refer to our disclaimer and non-GAAP reconciliations included in our presentation, which is made available on the website this morning. With that, I'll hand it over to Bob to get us started.

Well, thanks, Joe, and good morning. It's a pleasure to be able to share more information with you about our sustainable solutions. I've been with the company a little over 15 years now. And during that time, we have completely overhauled our portfolio, truly moving from volume to value and becoming a premier formulator of sustainable and specialty solutions. The most significant aspects of that transformation have taken place in the last 4 years, with the divestiture of our PVC and distribution businesses and the acquisitions of Clariant Color and Dyneema. And we did all that against the backdrop of some pretty significant challenges, starting with the COVID pandemic, followed by raw material and supply chain disruptions and volatility and the war in Ukraine only made things worse bringing fear and recession to Europe. And I'm often asked against that backdrop, whether or not customer interest or demand for sustainable solutions has declined. And the answer is no. Quite the contrary, brand owners and their customers are as passionate today about sustainability as they have ever been, and so are we. I'm pleased with the portfolio moves that we've made because they've set us up for future growth and the ability to capitalize on important megatrends that will drive demand for sustainable solutions. Today is all about that, how we're innovating to serve our customers in that regard. And how that will drive and translate into stakeholder value. Following a short video, Jamie Beggs, our Chief Financial Officer, will get us started. [Presentation]

Welcome. Sustainability is all about making our world a better place to live. And many times, when companies talk about sustainability, it's very inward focused, how their operations are impacting the environment. the positive programs they have from a social perspective. The role of governance as well as their impact on diversity and inclusion, the traditional ESG framework. And we do all that, too, and we have a great story to tell. But our sustainability today is going to be about growth, how we help our customers with their sustainability initiatives and the material science behind the countless applications that we deliver to our customers every day. But before we get started, Avient has undergone a tremendous transformation with a series of acquisitions and divestitures that have made us the specialty company that we are today. Some of the largest of these deals closing just last year. So let's reground on who Avient is. We're a formulator, we're not a base-resin producer. In fact, I wouldn't even call us a chemical company. I like to say that we make [indiscernible] better. We bring it to life with color. We make it perform better with additives. We make it stronger with modifiers and reinforcements and what you're learning more about today is that we make it more sustainable. We're innovators. We have more technical resources than sales associates and 140 PhDs on staff who love to solve the challenges of OEMs like Nike, Tesla and P&G. And this is especially true when it comes to the planet. Over 85% of our innovation pipeline is dedicated towards advancing technologies and sustainability. We introduced new products every year where we have a healthy vitality index of 33%. We formulate nimbly across 104 manufacturing sites around the globe. And if you were to visit any of these sites, you'd likely be underwhelmed in terms of size and scale. But this is a good thing. Why? Well, first, we're not an asset-intensive business with CapEx just making up 3% of sales. This allows us to invest more heavily in technology, know-how and innovation. And second, being close to our customers matters, especially for OEMs, they need to produce their products consistently market to market, think Tropicana Orange, Pepsi Blue, Coke red, their brand is at stake, and they trust us to build it and protect it wherever they are at. Our asset-light model allows us to have a high level of free cash flow conversion. This chart shows a 10-year history of proven performance for delivering strong and consistent free cash flow. With flexible operations and low fixed cost overhead, we've been able to demonstrate this through multiple cycles. Cash is king or queen, as I like to say, and we've been putting it to work by growing and investing our business. Since 2016, we have been selectively building out our Composites portfolio with the most recent addition being Dyneema, the world's strongest fiber. We've also been expanding our Color, Additives and Inks platform where we are the #1 leading color formulator and performing inks provider globally. From bolt-on acquisitions to transformational deals, along with the divestiture of more commodity-like businesses we have built the strongest portfolio that we've ever had. We've completely transformed where EBITDA is generated from and now have 100% of our companies formulating specialty solutions. It's dramatically different from where we started and has significantly improved our profitability. We've also diversified our end markets with this portfolio transformation. In 2006, we had roughly 57% of our portfolio concentrated in Building and Construction and Transportation. And if we fast forward to today, we are now in more diverse and less cyclical end markets such as packaging, consumer and health care. This has made us more resilient in times of unpredictable market conditions and has helped align our focus on areas of higher growth. This portfolio transformation is readily transparent in our numbers. Not only have we been upgrading our portfolio with M&A, but we've also been investing in commercial and operational excellence. This has resulted in significant EBITDA growth and margin expansion. I've personally been on this journey for the past 3 years, and I've seen this navigate well through COVID, managed through significant supply chain disruptions, stay ahead of inflation all while integrating Clariant and Dyneema and divesting our distribution business. We love a challenge. We're better together. And with the portfolio transformed, we are poised to grow in excess of GDP. Which brings me back to why we are here today. It's all about growth. There are 4 areas that make up 60% of our portfolio, where we see tremendous opportunity to grow long term. These are sustainable solutions, composites, health care and growth in emerging regions. We talked about all 4 of these at our last Investor Day in December of 2021. For sustainable solutions, we briefly covered the megatrends supporting the growth in the market for this. For Composites, we discussed how it's the next generation of wood, glass and metal replacement. We talked about the aging population and how that's going to grow going forward. And then lastly, we talked about the translation opportunities in regions such as Asia and Latin America. Here's a quick recap of how we've been performing in all 4 growth areas since 2016, both in terms of total sales and organic growth. We've delivered exceptional results to date based on the changes we've made to our portfolio and our focus on execution. These will be the foundation of our growth going forward. For today's presentation, we're going to dig into the largest of these areas, which, as you can guess, is sustainable solutions, which makes up 1/3 of our portfolio. And we have 3 objectives. First, we want to provide current information on the demand environment for sustainable solutions and provide an update on how brand owners are making progress against their sustainability goals. Second, we want to describe the real challenges faced by our customers as they incorporate more sustainable materials into their applications. And then lastly, we want to share specific examples of applications within our sustainability solutions portfolio to give you an inside view of how we provide support to our customers every single day. You may have heard us talk about the 8 ways that we help our customers if you've been following us for a while, and that still remains true. But in order to simplify our presentation today, we did streamline these into 3 broad categories; reduce, renew and preserve. You'll hear more about the makeup of these categories as we progress through the presentation today. I'm really excited about the future of Avient, especially how it relates to sustainability. And after a short video, Walter Ripple will come up to describe the megatrends that support our growth objective of 8% to 12% for this exciting area. Thank you. [Presentation]

Hello, everyone. My name is Walter Ripple, and I am proud to serve as Vice President of Sustainability at Avient. By way of a quick background, I've been in the specialty materials industry now for about 32 years and with Avient for nearly 25. In my previous role at Avient, I was the Vice President and General Manager of our Global Specialty Elastomers business, which gave me a really unique opportunity to build strong relationships with key global OEMs like Procter & Gamble, Unilever, Pepsi, Baxter, Becton Dickinson, just to name a few. And I think this served as a very strong foundation for my transition into my sustainability role just a little over 5.5 years ago. I'm very excited to have the opportunity to share our sustainability story with you today. But I also want to share some of the challenges that our world and our customers are experiencing. And what will become abundantly clear as these challenges represent opportunities for Avient. And that is why our sustainable solutions portfolio has been and will continue to be a strong portfolio and growth platform for us into the future. So I want to start with our sustainability commitment, which is that we are committed to meeting the needs of the present without compromising future generations ability to meet their needs. And we established this commitment many years ago and have been executing upon it ever since. Our sustainability strategy can be defined by the four cornerstones of people, product, planet and performance. And we've aligned our messaging, our initiatives and our planning around these four pillars. If you haven't had the opportunity to review our latest sustainability report, which is out on our website, I highly encourage you to do so. We elaborate in detail on our initiatives and the progress we're making across these four pillars, but also I think it captures the essence of who we are. Sustainability is deeply embedded in our culture. It is integral for us achieving our vision and mission, and our associates are proud to be associated with our efforts. We are also aligned with prominent global sustainability organizations like the ACC Responsible Care and the UN Global Compact as well as ESG frameworks like GRI, SASB and TCFD. Now as we're advancing and executing upon our strategy, there are global megatrends in the background, which are shaping and driving our progress. So before I dive into customer-specific trends, I wanted to highlight a few megatrends in place that are really in alignment and driving sustainable solutions demand. Clearly, advancements in technology like 5G connectivity, the Internet of Things and EV batteries are accelerating. Lifestyle refresh is acknowledging that consumer behavior is changing. And, in fact, accelerating after the pandemic to be more personalized and to be more purpose-driven. And we're going to talk more about that in a few minutes. But I also wanted to highlight the continuing evolution of health care and especially as it's related to supporting an aging population and personalized home health care, for which Avient has a very strong solutions base for the customers in this demanding market. So these are the societal megatrends, but we're also identifying trends and influences throughout our industries and directly at our customers. So let's take a look. A key aspect of my role is engaging with customers and throughout the value chain. And in fact, I have personally met with over 300 customers in just a little over 2.5 years, really understanding the developing trends and the challenges that they're facing. The some businesses may see these as real risk to their business, but we do not. Because of our sustainability portfolio, we view these as opportunities for Avient. So let's take a deeper look at some of these trends. Many studies are showing that consumer behavior is indeed changing. In fact, Simon Kucher just recently, released a study that found that 85% of consumers now globally consider sustainability when they're purchasing a product, 60% view it as they're -- one of their most important criterion and now over 1/3 are willing to pay a premium for it up to 25%. Now consumer purchasing decisions are shifting as well. IBM jointly published a study with the National Retail Federation, and they found that the segment of consumer, which is growing the fastest and is now the largest segment at 44% is the purpose-driven consumer. This is important because the purpose-driven consumer seeks products and brands that align with their values, and they're willing to make changes in their purchase to make that happen. So think of a practical example, 15 to 20 years ago, the consumer purchase decision was almost exclusively based on brand or on value. And then think about the consumer today, many times purchasing online, they read the product details. They want to know how something was made, where it was made, what's in it, many times what's not in it, and they want to know what the brand stands for in the product that they're buying. Now this has been a big change over time, and this is the purpose-driven consumer. 60% of these categories now are seeking sustainable solutions, and they're willing to pay for it. So it stands to reasons that brand owner growth trajectory would shift as well. And in fact, it has. The New York Stern School of Business has recently published their annual report that found that indeed sustainably marketed products grow at a rate 2x faster than conventionally marketed products over the last 5 years. Now despite the fact that these sustainably marketed products are only 1/5 of the market share, they make up 1/3 of their growth. So as consumers have spoken, brand owners and retailers are listening and they are acting and they put very aggressive goals around some of these sustainability challenges. In this case, we show recyclability and recycled content commitments. And you can see it's across many end markets and a variety of applications, but it is also due in the 2025 to 2030 range, which means that there's an urgency to achieving them. Now this has been really exciting to watch play out. In fact, brand owners are now launching sustainable products across some of their more marquee brands. Here are just a few examples. In terms of consumer product goods companies like L'Oreal, who launched their Redken hair care products at 93% recycled content in their packaging. As well as Colgate-Palmolive launching their dish soaps at 100% recycled content. But the same is true for food and beverage companies as well. Coca-Cola has launched their entire DASANI product lineup in 100% recycled containing packaging. Now I don't know if you've seen those. I've seen them in a few stores, but now their normal blue label has very large writing that says 100% recycled content, so they're highlighting the sustainability of their packaging. Kraft Heinz also similarly launched their Mayo and Miracle Whip brands in 100% recycled content. So this is exciting for us because we partner with global OEMs just like this to help them to reach these targets and grow in their most important brands. So it shouldn't be surprising that plastics demand is expected to grow and substantially. McKinsey has published a study that finds that by 2040, they're projecting that overall plastics demand will almost double to 700 million metric tons. And at that time, 30% of that demand will be for recycled raw materials. But even shorter term, recycled raw material demand is expected to grow at a 12% CAGR through 2030. So the demand for sustainable solutions that can help our customers to be able to utilize this recycled content is here to stay. Now advancing a circular economy and recycling commitments aren't the only ones that brands are making. These are the exact same brands that I showed earlier, but in this case, these are their commitments around reducing their carbon footprint. Now Avient has a number of solutions that can help them to meet these commitments as well. And we're going to show you some specific examples of these in a few moments. Our customers are feeling a lot of pressure and from a lot of stakeholders, and it's not just their customers. It's also investors, NGOs, even their employees. The message has been clear and consistent. They want change. They want goals, they want commitments and they want progress versus these commitments. Now these stakeholder pressures are not the only pressure if that wasn't enough, right? In fact, there are governments now mandating this change through regulations, packs, accords. Some of them are country-specific. Others are global, but they're all aiming for a more sustainable and circular world. These are just a few examples of recent announcements. The European Union has set a target to increase windmill -- offshore windmill capacity by 25x by 2030. It's not 25%, it's 25x. Avient has a number of solutions in this marketplace, including high-strength lightweight composites that help to strengthen and reinforce windmill blades and Dyneema ropes that can secure these offshore windmill installations in place. Now these are very cool applications and we're going to show you some very specific examples in just a few moments. The global fuel efficiency standards have been on the increase for some time, and they've really been accelerating recently. The Biden Administration has announced a 10% annual target increase for fuel efficiency standards for corporate fleet vehicles by the model year 2026. That equates to nearly a 50-mile per gallon target. So really aggressive target. Now Avient supplies a number of lightweighting solutions to our customers to help them to meet these very challenging demands, including composites, which can replace metal up to 80% weight savings and our chemical foaming agents that can provide weight savings of 20% to 30%. And these are just a few of the applications that we have in this space. Also, the recent U.S. infrastructure bill passage included $42 billion for investment in the fiber optic cable industry. And Avient is a leading supplier to the fiber optic cable industry. Now there are a number of activities and initiatives ongoing to advance the circular economy as well. In fact, 175 countries are supporting the UN Global Plastics Treaty, which is objective to manage plastics pollution. Now the outcome of these discussions and initiatives were most certainly be more requirements around recyclability, recycled content and investment in recycling infrastructure. Just like the groundbreaking European Union Plastics Packaging Law that was just recently passed. It requires 100% recyclability by 2030 for plastics packaging. But it also requires recycled content at a level of 25% by 2025, 30% by 2030 and 50% plus by 2050. It's estimated that there are around 145 recycling-related legislations in place or under evaluations globally according to McKinsey. Now regardless of the outcomes or the required actions from many of these activities, Avient is here to help our customers through solutions that can help them to improve recyclability and increase recycled content. Now this is very exciting for us. We partner very closely with customers throughout virtually every end market to understand their requirements. And we know that sustainability needs vary by market, but also by the degree of pressure that they're experiencing from the trends and regulations that we just discussed. So next, we're going to show you how and where we do this. Our 3 segment presidents are going to share some of the many applications and sustainable solutions that we help our customers to meet their sustainability commitments. You will see applications that you feel, touch, experience and benefit from every day as we go through these examples. So after a short video, you will see how we do that in three categories: Three objectives our world is facing and three ways that we help and that is to renew, reduce and preserve. [Presentation]

Good morning. I'm Michael Garratt. I'm the President for Color Additives and Inks for Europe, the Middle East and Africa. And I've been in the industry for 33 years now and with Avient for the past 10. And during the course of my career, I don't think the industry has ever encountered a more exciting challenge than the one we face today, sustainability. Exciting? Yes. Because for me, as an outdoor-nature enthusiast, it turns out the most significant impact I can make as an individual on the environment, is to actually grow my business. So it should come as no surprise that within Avient growth and sustainability are intrinsically linked. That's because we have important customers, important customers with pressing sustainability needs. The regulatory and legislative framework within which they operate is growing more prescriptive and more urgent as Walter just described. And believe me when I tell you that time is of the essence. Take, for example, California, they were the first state to pass legislation that mandated a minimum 15% recycled content into beverage packaging in 2022. So that deadline has already passed. But there are 20 other states in queue waiting to pass similar legislation. As Walter noted, in the European Union, the mandate to have at least 25% recycled content in packaging will be in place by 2025. Well, that's only 16 months away. So our customers are motivated. They are incredibly motivated to move towards a circular economy and to address sustainability. But they're finding that challenge to be more difficult than expected. So what's the customer to do? Maybe they should just walk away from plastic altogether. But if sustainability is our ultimate objective, that wouldn't be the best decision. Because plastics are part of the solution. They still outperform alternative packaging constructs across a number of important sustainability items. Versus plastics, these alternative packaging materials consume 6x more water. They generate 5x more waste to landfill, 3x more greenhouse gas emission and are twice as energy intensive. And what doesn't show on this chart is that when you look at a per unit cost for packaging, plastics continue to be the least expensive option. So when you look at these different elements, which of them do customers actually care about. Was it turns out they care about all of them, which is what makes sustainability a challenge and is what makes plastic an ideal solution to help them overcome it. And as a result, you've seen in Walter's presentation that many of the global brands have made significant commitments, public commitments towards reducing greenhouse gas emissions and increasing the recycled content within their products. And in this regard, how are they doing? Well, as you can see, it's mixed. Some are well down the path towards achieving their 2025 objectives, while others are lagging. And that's because it's not easy. For one, there is simply not enough high-quality recycled material available in the market to satisfy the collective demand that these pledges entail. Second, there are still some significant technical hurdles to overcome before we can push this much recycled material into mainstream manufacturing. And this is a good point for me to insert a little bit of polymer chemistry. When you heat, melt and freeze a polymer, you put it through a heat history. And every time you put a polymer through a heat history, you ultimately degrade some part of its backbone. This degradation leads to discoloration, reduce mechanical properties and the generation of unwanted molecular species. And if we look at mechanical recycling, which is the most dominant form of recycling today and projected to remain so into the future, it also creates its own share of issues by introducing contamination from labels, adhesives, inks and dyes. So this makes it a real challenge for brands and converters to address. But that's really where Avient steps in. We bring technology and service to the table that really helps them address five key areas within the packaging environment. First, we help them with discoloration, contamination. We help them to retain mechanical properties and the integrity of their parts. We help them to define and procure a consistent quality stream of recycled materials, and we help them move towards a mono material packaging construction, which is ultimately more recyclable, more sustainable and lower cost. And I'm going to walk through the type of technologies we bring to bear that create value for our customers as we address specific markets, markets that are important to Avient and markets that we all understand. And I'm going to start with food and beverage packaging because it really is in the spotlight, in the glare of the sustainability movement. Before I go further, you'll notice revenue noted to each slide as I go through application by application. And you'll see this through the rest of the deck today. This revenue is the revenue generated in 2022 by the technologies that I'm going to cover for the applications that are specifically noted on the slide. So back to food and beverage. The challenges in food and beverage are similar to all other markets for plastics with one significant and notable exception. And that is navigating very heavy regulation for food contact. It's a significant challenge. And if you were to talk to our customers, you would find that Avient's ability to help them navigate through these regulatory obstacles would set us apart from our competition. That and the patented and unique technologies that we can bring to bear to support them in their sustainability journey. An excellent example of this is our AAnchor acetaldehyde Scavenging technology. It's a unique and patented technology that helps to scavenge acetaldehyde. And you're probably wondering what is acetaldehyde. Well, acetaldehyde is a chemical byproduct that is produced naturally when you manufacture virgin PET. But with recycled PET, this acetaldehyde issue becomes even greater. And it's a contaminant because it migrates from the plastic and contaminates the beverage within the package. And it imparts an unpleasant flavor. Well, that's a headwind to incorporate more recycled content into the bottle. Unless you apply our AAnchor technology into the formulation, where we can trap the acetaldehyde, secure it in the wall of the bottle and prevent it from migrating and providing a foul taste to the beverage. At the end of the day, this allows the converter to add more recycled content to the bottle than they otherwise could out of fear of increasing acetaldehyde contamination. It's effectively an rPET accelerator. Another unwanted molecule when it comes to food and beverage, shelf life and spoilage is oxygen. Now most oxygen scavenging technologies occurs through the wall of the bottle. But the recycling community views that as a contaminant. Well, our patented capture technology, scavenges oxygen through a very unique mechanism. It scavenges through the bottle cap. That leaves the wall of the bottle inherently clean and more valued by the recycling community. In fact, we've received much sought after critical guidance certification from APR, the American Plastics Recycling Association. So while we deal with unwanted molecules to help protect food and beverage, we also have to protect them from other things, like UV. UV is also a contributor to food spoilage and reduction in shelf life. And that's really where our ultimate UV Light Barrier and Cesa Light Additives technologies come into play. They protect the package contents by blocking the UV from transferring through the package wall. And they do it so efficiently that the vendor -- the converter is able to reduce the wall thickness of the package without worrying about increasing the risk of UV penetration. So ultimately, less plastic is consumed. And it's really targeted at clear packaging like you see on this chart. As are our ColorMatrix branded Process Aids and Toners, which really help encourage the use of recycled PET in clear packaging like these bottles. So when we bring our PET into the bottle and put it through another heat cycle, we run the risk of again damaging the polymer and creating further discoloration. By using our Process Aids, we're able to protect the polymer during this heat cycle, reducing any impact of discoloration debt results. And if there is any discoloration that's residual in the bottle, this is where our Toners come into play. They help correct, smooth out and cover up any discoloration that remains in the bottle. And you've seen these toners in play in real life. Whenever you pick up a water bottle, that's got a blue tint, that bottle contains toner. And I couldn't close out the food and beverage discussion without addressing what could be my favorite technology, and that's SmartHeat. SmartHeat really delivers sustainable value to our customers through a number of different mechanisms. But ultimately, what it does, it allows plastic converters to blow their bottles at reduced operating temperatures. Well we know that reduced operating temperatures mean less discoloration, less impairment of mechanical strength. And obviously, at lower temperatures, it generates a lower carbon footprint and cost savings for the converter. It's really a trifecta of value delivered by Avient. But it's not just product, technology that our customers count on. Because as I said earlier, the move towards a more sustainable future is challenging. And I'll describe this challenge by putting you into the shoes of one of our customers. So let's say you're a consumer product executive. You spent years probably decades building the equity of your brand. You've designed your product, the package, the channel to market to intersect squarely with your target market. And you know that for your brand to be successful, it has to be differentiated, meaningful and identifiable. And in this regard, you know that color matters because you've seen the studies that indicate that color can account for up to 85% of why a consumer chooses one product over another. But now you've been throwing a curveball. You're in Europe and you have to include 25% post-consumer recycled content in your packaging. And that makes your ability to hit a branded color target incredibly difficult. So we turn to Avient, where we can support you with our recycled color prediction service. This is really a digital service that draws on the tremendous data and know-how that exists within Avient, and we use this to help guide customers towards their targeted brand color. So we can sit with the customer, understand what recycled material they have available and quickly determine whether or not using it, they're going to be able to hit their target or not. And if they can, what is the amount of recycled material they can put into their packaging before it becomes a problem? And how do we formulate around it, which often leads to increasing the concentration of color in the formulation which is ultimately a good thing for us. This is a fantastic service. It is in high demand from our customers, and it recently received first place for innovation with the plastics recycling community in Europe this summer. So this really helps customers address challenges with their existing packaging constructs. But they also engage with Avient to understand what their packaging will look like in the future. That's because they want to understand what's the impact of plastic materials that goes through one loop of recycling, a second, third, fourth? And what does that mean for them? So they come to work with us and our talented group of R&D scientists in Italy at our CycleWorks Center. And we work with them to understand how to incorporate recycled material into their packaging. It's really sustainability by design. And it's a great opportunity for Avient to work shoulder to shoulder with key decision makers in the technical communities of the customers that we serve. So while we help them on future designs, we get great insight into where they're heading, which helps us to develop new additive technologies and chemistries to be able to support their strategy in the long run. And this has turned out to be a very lucrative way for us to develop and launch new product technology. Fantastic example is a product we launched this year, our Cesa Additives for recycling. This was launched out of this collaborative discussion that we had with -- in CycleWorks. And it really targets polyolefin packaging, polyethylene and polypropylene in an opaque concept like you see on the screen. So think about shampoos, conditioners, soaps, lotions, things like that. When you add our Cesa Protect Additives to the formulation, it protects the polymer as it undergoes another heat cycle, prevents it from getting discolored, prevents it from seeing mechanical degradation. Think of it a lot like sunblock for plastics. I'm incredibly proud of this technology. It was only just launched, and it also received an award, second place at this Plastics Recycling Industry Association [indiscernible] Banquet in Europe this summer. Finishing second only behind our color prediction service. Now I intentionally started the conversation around packaging because it's an important market segment for Avient. And it is at the epicenter of the focus for sustainability. The sustainability applies to every market segment that we serve and every material, whether it's plastic or nonplastic alike. So let's switch gears a bit and take a look into the consumer market space. This is another important market for Avient and another area where I'm proud to say that we bring technology to bear that helps our customers move forward with their sustainability strategies. I will note that this is a far more fragmented market than what we've just discussed in packaging. Many more customers, many more applications. But that's okay because that fits right into Avient's wheelhouse. It's what we do, it's who we are. We're essentially a mass customizer. And we're exceptionally good at taking customer needs and converting them into technologies and products that they can use, which is why when BIC was looking to increase the recycled content on the grip that you see here on the razor, they turn to Avient. And we work together with our reSound Recycled Thermoplastic Elastomer Technology to find a formulation that works for them -- that works with them, especially in their high-speed manufacturing process. Similarly, when OtterBox was looking to increase bio content for their cell phone case, they came to Avient. And we were able to extend that same product family, reSound to include bio-based materials, which ultimately helps OtterBox to reduce their carbon footprint, which was their target. Because when you introduce biomaterials into a formulation, they actually count towards the carbon footprint with 0 impact. That's because they were formerly carbon sinks in their past. This also extends to more rigid applications like this Bose Power Box. Bose came to Avient looking to reduce the weight of this portable power box and to increase recycled content. So we were able with our Nymax Recycled Nylon formulations to provide a product that met their standards for performance and increased recycled content to 60%. Now the last three consumer products that I've described were a little different in how they approach sustainability, either including recycled content or biomaterials, but the challenge was ultimately the same. The consumer had a desire to progress their sustainability strategy forward, but they were unwilling to compromise on performance, processability, or aesthetics because they are consumer products after all and the consumer still has to want to buy them. And this is where our really talented team of scientists and our core of R&D engineers really bring value to the table every day. They bring decades of experience and know-how, knowledge about the application, knowledge about the polymer space, and they are able to develop technologies to suit the customer's specific needs. It's a very niche approach application by application, but it matters with 20,000 customers within Avient and even more applications that we serve, these niche applications that we secure add up to something very meaningful over the long run. Now I couldn't get off this page without talking a little bit about our carbon footprint analysis because there was a time when we might have received 10 or 20 requests a year to run a carbon footprint analysis. This would then go into our customers' carbon footprint analysis for their own part or application. So we were an important input. Well, today, we get dozens a day. Almost every customer in every market is requesting a carbon footprint analysis from us. And you might say, so what's the big deal? Doesn't everybody do this? And my answer to that would be no, at least not as well because it requires extensive data and detail throughout your supply chain and the systems required to pull it out to be able to do the analysis and alignment with an ISO standard. And yes, there is an ISO standard for how you generate a carbon footprint analysis. The analysis that we provide are aligned to that ISO standard. And importantly, they are certified that they're aligned by TUV Rheinland, which is a third-party auditing company that audits carbon footprint analysis, and we are very happy to place their stamp of approval on every analysis that we send out. I want to address one final market segment because it's one that I particularly enjoy, outdoor and recreation. And why is that? Because in outdoor and recreation consumers will pay for value. They will pay for incremental increases in performance in whatever sport that you're looking at. They are also purpose-driven and environmentally aware. So sustainability matters. That's why when Speedo was looking to come out with their next generation of swimming goggles, they came to work with Avient. They, too, were looking to reduce the carbon footprint for their product. And working with them, we again took our reSound BIO Thermoplastic Elastomer technology and we're able to incorporate from 35% to 70% biomaterial content depending on the softness of the grade that they were using. Now in this segment, customers are willing to pay for sustainable solutions, and they are willing to pay for high performance but they will not sacrifice performance. So whatever we deliver has to meet the exacting standards of the customer and the application that they're taking to market. That's true when you look at the ATVs on the right. Here, we are looking to take out weight, to replace metal and to find a number of different applications on these ATVs where plastics could play a part. We successfully took weight out of this application without sacrificing performance. And if there's ever a property that I found consumers in this space are willing to pay for, it's lower weight without sacrificing performance in almost every sport you can think of, mountain bikes, lighter. Paddleboards canoo's, kayaks, lighter, tents, backpacks, pools, snow shoes, all lighter. Consumers here are purpose driven, but -- and they will pay for performance. And the important part for Avient is that the technology that we bring into these markets are visible and are valued. So I've run through a fair amount of detail today on applications, technologies and markets. And I could have gone on for hours really. There are hundreds of other products and thousands of other applications we could have covered if we had time. But the applications and technologies that I did cover account for 55% of the $340 million in sustainable revenue that we generated in 2022 and under the renewable umbrella. And this will continue to grow. Because as I discussed earlier, we have important customers with pressing sustainability needs and aggressive objectives. And the time clock is starting to run down on their ability to meet the legislative agenda. So as the industry leader, they turn to Avient, for technology and for service. which is why I said at the beginning of my presentation that for us, growth and sustainability are inextricably linked. And when you look at a recent McKinsey study you see that recycled resin is expected to grow with a 12% CAGR through 2030. That's 4x the growth rate of Virgin Plastics. We have existing technologies within our portfolio that can help support that growth. And through our collaborative efforts with our customers to develop new products, we're working on technologies that can sustain this growth well into the future. So with that, I'd like to thank you for your time. And after a short video, I'll turn over the stage to Chris Pederson, our President for Specialty Engineered Materials. Thank you. [Presentation]

Good morning. I'm Chris Pederson, President of our Specialty Engineered Materials segment. It's a pleasure to present to you Avient's broad set of solutions that are addressing our customers' needs in another critical sustainability area, reducing weight and energy consumption. Prior to joining Avient 5 years ago, I spent the previous 30 years in global aerospace and composite materials businesses. Businesses where a significant premium is put on weight and where you wake up every day thinking about helping customers reduce weight. The same is true at Avient. Lightweighting opportunities and benefits exist across many of our markets. The world needs it, our customers demand it. And we have a broad set of solutions that we tailor to a multitude of unique applications and performance requirements. This need is a response to several pervasive challenges that exist in our markets. These challenges include improving fuel economy, where lighter weight materials provide a cost-effective solution for reducing fuel consumption and extending battery life. By collaborating with our customers to take out cost and weight, it enables them to achieve their sustainability goals. Lighter weight alternatives are also key enablers of alternative power solutions. Energy demand and costs are continuing to rise around the world. And at the same time, there's a huge push to reduce dependence on fossil fuels to minimize carbon footprint and to limit VOC production. Our portfolio of solutions works to meet all of those challenges. And I'd like to share some great examples of where we're helping. I'll start with automotive. Now weight reduction is absolutely critical in automotive. With just a 10% reduction in vehicle weight can improve fuel economy by 8%. Now that's an improvement that's very important for our customers as they're required to meet new and increasing fuel economy standards. Such as in the U.S. with the Department of Transportation's rules call for auto manufacturers to meet a 10% annual increase in fuel economy by 2026. And that's a real challenge for OEMs because it's not as simple as just removing weight from the existing list of components. In order to meet emission standards, OEMs are also having to incorporate additional components, components such as vast emission controls, safety devices as well as integrated electronic systems. And this adds weight back in, which in turn increases the importance of finding innovative opportunities to take weight out elsewhere. So there's ongoing puts and takes, but this means ongoing opportunity for Avient. We partner with nearly every major OEM and their tier suppliers every day to design and deliver solutions that reduce weight, in both structural and nonstructural components. For example, our Hydrocerol Foaming Agents are used in the manufacture of lighter weight dashboards and other components. Here, customers can use 10% to 20% less material to create components that are visually identical to heavier cars, while still delivering a cost-effective solution that has no impact on performance. We also view Reduces as more than just weight. We're proud to help customers reduce overall carbon footprint as well. And one way we do this is by reducing the emissions of VOCs. Great examples of this are our SmartBatch Paint Replacement and Versaflex protective film materials, which eliminate the VOCs associated with painting and adhesive processes, all while providing the critical UV weathering and wear protection that the OEMs need. In addition to needs presented by the OEMs, the aftermarket applications are also seeking to reduce weight. And examples where we provide solutions are in running boards where our complete long fiber composite materials provide 40% to 50% weight reduction versus the metal alternatives. Similarly, our solutions can reduce weight even further by formulating to add other key performance characteristics to the application, characteristics such as thermal conductivity. An example is our ThermaTech materials, which are able to dissipate heat and in turn, extend the life of LED components at a much lower weight than their metal alternatives. That's two sustainability benefits in one Avient solution. Electric vehicles share similar challenges and sustainability targets with their gas-powered cousins with respect to lightweighting and carbon footprint reduction. There is a significant amount of investment in this space across the world. And EVs are only going to grow. Now today, EVs represent 14% of the total passenger cars sold with China representing 50% of those sales and the U.S. 6%, but the U.S. is targeting to achieve the 50% mark by 2030. And in some states like California, they're targeting a complete conversion by 2035. And lightweight materials are at the center of the design of new makes and models. Consider this, the average battery today is between 800 and 1,300 pounds. That's half a ton just in the battery. It is the heaviest component of the car. That creates a high degree of focus on reducing weight in the EV power system and everywhere else for that matter. It's about sustainability, performance and cost of ownership for the end user. As the way that the vehicle has a direct effect on the distance per charge, just a 10% reduction in weight of an EV results in a 14% increase in its range, all of which drives an increase in demand for lightweight material solutions across the entire vehicle. And Avient provides solutions for these needs. But we don't just provide materials. We start early in the design, leveraging our high, wide and deep relationships with customers, and it begins with close collaboration in the initial design stages. This is done through our talented team of industrial designers in Avient design. By being able to think about and bring forward ideas that consider both our customers' design needs and the material performance needs, we're able to better identify tailored and higher-value solutions for our customers. Now these are solutions such as in components for the battery frames and associated connections. Our Maxxam materials are used to significantly reduce weight and provide the high temperature and chemical resistance needed in the harsh and demanding environment under the hood and console. And in the cooling system of the batteries where our Versaflex Elastomer materials are able to meet the critical high-temperature and chemical resistance requirements while providing the ceiling and wear capabilities to give customers confidence in the design range and lifetime of the power systems. But it's not just about the cars. In addition to the electrical vehicles themselves, there are complementary investments being made to build out the infrastructure needed to support the growth of EVs. In the U.S. alone, the Infrastructure Investment and Jobs Act has allocated $8 billion to build out the EV charging infrastructure. Now these infrastructure components such as charging stations, cables, and connectors are dependent on engineered materials. And Avient provides a number of key solutions. By building off our long-standing business in the wire and cable market our ECCOH, low smoke and non-halogenated materials are utilized in the charging cables, while our Edgetek fire-resistant materials are used in the connectors. A similar market dynamics around lightweighting, are clearly evident in commercial transport as well. Customers in this space are pursuing any opportunity to lightweight as they feel extreme pressure and need to improve fuel economy and reduce carbon emissions. In a recent survey of small to midsized carriers by Convoy, 40% reported that they are feeling strong pressure to reduce emissions. Nearly 90% reported that fuel economy is a very important factor in their current and future truck purchases. And similarly to the trend for passenger vehicles, we also expect to see increasing electrification of commercial transport driving even further demand for lightweight materials. In fact, in China, they've already committed to achieving 50% of sales of all vehicles, including commercial, to be electric or hybrid engines. So the commercial transport end market opens up additional growth opportunities that are optimal for our portfolio of lightweight materials from our composites platform. Our thermoplastic composite panels are used in the form of trailers, providing a number of key sustainability and performance benefits. Not only do they reduce weight by as much as 60%, they provide a corrosion-free and more durable solution than wood or metal floors. And most recently through some great work by our R&D team, we've expanded our portfolio of options to now include laminates and panels that incorporate a minimum of 95% recycled PET, reducing carbon footprint without sacrificing performance. Our Composite Laminates also helped to reduce drag. When you use in the aerodynamic side shields you see on so many trailers on highways today. Our laminates provide a durable and fatigue-resistant solution for the millions of miles these trailers spend on the road. Reducing drag translates to reduced fuel consumption, that's an end customer win for their P&L and an environmental win for our planet. Now moving from road to rail. It's the same desire to reduce weight and the same resulting benefits to our customers and the planet. Our composite panels are used for rail car doors and interior wall panels and the benefits here are significant. Our solutions reduce weight by 30%, lowering fuel consumption, cost and carbon footprint. And they're also corrosion-free, impact in debt resistant adding to the longevity of the rail car's life cycle. In terms of the interior panels, our thermoplastic laminates can be shaped and formed to improve airflow and cooling efficiency for temperature-sensitive cargo. While at the same time, providing all the benefits of a lower weight solution. Next, let's head from the train to the tarmac in aerospace, where every pound of weight is critical you'll find our composite panels in action every day. In the large cargo container shipping goods around the world, durable, lightweight, easy to repair, all characteristics that help enable sustainability goals. But these aren't the only Avient applications used in the cargo bay. This is also where our most recent acquisition, Dyneema, is used in the lightest weight, strongest and longest lasting cargo nets in the industry. In fact, the use of Dyneema Fiber in these nets results in a 60% weight savings over traditional polyester cargo nets and they nearly double their useful life. Now moving to the cabin. We also provide lightweight solutions here. We're replacing metal with our Complet Long Fiber Composite materials and components for seat frames and for armrest. This reduces weight, but also meets the high strength and compliance requirements for aerospace applications. And finally, we head to sea, where you'll find one of Dyneema's key end markets and a host of applications in marine infrastructure. Here, customers are looking for lightweight solutions that they can trust, lightweight solutions that can withstand demanding environments and provide solutions that they can rely on, rely on when it matters most. So consider this, the output and production of the aquaculture industry will surpass capture fishing this year. And aquaculture is essentially farming in the water. And it's only expected to continue to increase in share. It's an environmentally responsible source of food, but it's also used to rebuild stocks of threatened or endanger species. So fish farms turn to Dyneema. Driven by the industry's need for larger farms and increasingly harsh offshore environments. The extremely strong and lightweight Dyneema nets, which provide 60% weight savings versus the alternative ensure that fish are kept in and predators are kept out in all circumstances. Another key advantage of Dyneema strength is that it allows for a thinner net. Not only does this benefit the farms in cost and lifetime, but it also leads to increased oxygen flow, creating a healthier, growing environment. Another key area where sustainability and reliable performance is so critical is in lifting slings. So imagine for a moment, assembling an offshore windmill, where you not only have to transport all the components to a remote offshore location. So weight of the component is absolutely critical. But once you get there, you need to be sure that you can trust your equipment during assembly, the [ peer ] size and stakes are enormous. So our customers count on Dyneema Fiber in their lifting slings. Slings that provide a 70% weight savings compared to their steel sling counterparts. Similarly, for maritime mooring lines, Dyneema is the preferred option for the same reasons. They are stronger and lighter weight than alternatives and they have to be. The size of vessels at sea when stabilizing and securing create tremendous strength requirements for the ropes. Combine this with the harsh conditions created by extreme temperatures, storms and other elements failure isn't an option, which is why Dyneema has become the industry benchmark for mooring lines. But equally important, our solutions provide a service life that is 2x longer than the alternative. That lengthens our customers' replacement intervals and therefore lowers their overall operating costs. The megatrends here indicate continued strong demand in this end market for our solutions. One key factor is the current backlog for liquid natural gas tankers where currently, there are nearly 300 tankers on order with production expected to last at least through 2030. Each of these vessels carries its own mooring lines. So we're poised to grow in line with these encouraging order trends because our product provides the best solution. I mentioned at the onset of my remarks that there is a huge push to reduce reliance on fossil fuels with alternative forms of energy. We're helping customers in this space as well. I'd like to conclude our reduced section with some examples. But first, some context, 80% of the global energy is generated from fossil fuel. Governments across the world are pushing for energy from renewable resources. This has also been accelerated by the war in Ukraine as Europe pushes to move away from the reliance on oil from Russia. Germany is on track to have 65% of total energy from renewable resources by 2030. The U.K. wants to have 50% of its electricity to come from renewable resources by 2025. China has joined the effort as well and plans to achieve 16% of this total energy from renewable resources by 2030. One of the more widely used alternatives is solar. Based on the International Renewable Energy Agency forecast, solar capacity installations are on track to grow 30%, and we anticipate this will continue to grow double digits well into 2025. While solar energy is great, but it does come with a unique set of challenges for products that produce and harness it. Regions ideal for solar power have the [ tenth ] sunlight and often extreme heat. Equipment needs to perform in both. And really any other thing, Mother Nature throws its way. Now Avient has a long history in color and additive solutions that enable solar infrastructure to withstand the harsh weather conditions and extend its useful life. The cable jacketing for example, has our ECCOH and Syncure Solutions that not only enable the cables to withstand the outdoor weather conditions but also meet critical cable standards and requirements on flame retardancy. Another popular alternative energy is wind. As Walter mentioned earlier, the global offshore wind sector is expected to increase 25x in the EU alone by 2030. And could account for as much as 26% share of the total alternative energy capacity. And in this area, our composite solutions offer excellent strength in lightweight materials that replace steel. One of our solutions used in wind turbines is that the root stiffener, which holds the large blades to the rod. It's a critical part that not only provides the stiffness, but also the integrity required for this demanding application. You'll notice two on the photo of the offshore turbine, and it's being pulled by a tug boat. Those tolling lines are made of Dyneema Fiber, 15x stronger than steel and 7x lighter versus steel at similar strength. And those towing forces on these lines is up to 100 tons, all this incredible performance, and it also floats on water. Now another advantage of Dyneema over steel for these towing lines is the ease of connecting, handling and detaching in harsh offshore environments. The faster you work offshore, less vessel installation time is needed, resulting in saving fuel costs. So to wrap up, whether it's on sea, air or land, customers are choosing Avient in their quest to reduce -- reduce part weight, reduce energy consumption, reduce carbon footprint and fossil fuel. And the opportunities on ways we can help are endless, and that's what we're working on. And it's incredibly rewarding to be a key part of the innovations and solutions having this positive impact. Reduction of weight has always been one of the inherent benefits of plastics and the extent to where and how a material replacement can be done, and the importance of doing so is now at an all-time high. Governments around the world recognize this, and they're taking action. Transportation is certainly a primary focus. Governments are establishing and proposing fuel efficiency standards that continue to raise the bar on OEMs. And what is done is put them and their tier suppliers on notice. But what it's done for Avient is put us in a fantastic position. And as I just shared, alternative energy helps reduce impacts to our planet. Our sustainable solutions align well here, too. With growth in solar and double-digit growth in offshore wind installs over the next decade, we expect to continue our trajectory of growth as well. Our final presentation category today is called Preserve. And now Woon Keat Moh, President of our Color, Additives and Inks business in the Americas and Asia will highlight some of the important work we're doing for customers in this area. [Presentation]

Good morning, everyone. I'm Woon Keat Moh, President of Color, Additives and Inks for the Americas and Asia region. Now I've been in the materials industry for over 25 years and have been with Avient for 13 years. My first 10 years was based in Asia and the recent 3 years over here in U.S. Now I've been very fortunate to have lived in the different regions, both personally and professionally. Now in terms of the region, there's definitely different uniqueness in terms of culture, market maturities and even customers. But there is a recurring constant and growing team on the focus on sustainability across all the regions. Now our focus has always been to develop solutions for our customers. And now what excites me even more is that we are not only developing solutions to help our customers to achieve their sustainability goals, but to contribute as well to the health of the planet. Now you've heard today earlier from Michael and Chris on Reduce and Renew. So I'm going to share with you the final category of today, which is on Preserve. Now to put importance on Preserve into context. Based on our current consumption, we would need 1.8 planet. Now this is based on statistics from the Global Footprint Network. Now imagine 1.8 planets to provide resources for us or resource and to absorb our waste. Well, we only have one planet Earth, hence, the importance for us to preserve our precious resources. And this is an area where Avient is proud to help with our sustainable solutions portfolio. Now you've heard across today as well. All -- every industry is being challenged to come up with alternate processes to minimize the impact to the environment. Now this could be utilizing sustainable energy sources like solar, water or wind. This could also be utilizing sustainable raw materials. But however, a switch over to bio-based raw material is not as straightforward. The chemical properties are different, the processing is different. Hence to achieve the similar performance and quality standard would be a technical challenge. But again, where we strive on at Avient. Now in Avient, we also view preservation in another critical capacity of sustainability, the preservation of life. And we are helping our health care customers to achieve their sustainability goals. Now let's get started. Let's share with you some of the applications and end markets where we enable preservation. And I will start with a very [ pressured ] resource that we would like to preserve water. Now a similarly unsuspecting industry of water consumption during production is fashion, that is clothing and textile of all types. In fact, on average, a person consumes 11.4 kilograms, which is about 25 pounds of clothes annually. While my 20-year old growing wardrobe is definitely going to push this average even higher, but that's a story for another day. Now regardless to achieve the colorful hues, designs and effects of the evolving fashion, it requires a dyeing process. The dyeing process takes up a lot of water. In fact, textile production is estimated to contribute 20% of global clean water pollution. Now the industry has responded to demands for more sustainable practices. Now they have started to adopt an alternative dyeing process, which is called Dope dyeing or Spin dyeing. Now this process uses 75% less water, that's huge. And even being in the forefront has a host of solutions portfolio for spin dyeing. For example, our Renol coloring for Spin dyeing enables spin dyeings to achieve the vibrant colorful hues that were traditionally only achievable by conventional dyeing process. Now brand owners like lululemon, Nike, Adidas, Patagonia has already started to leverage on this technology. Now another approach to sustainable clothing is to extend its useful life. Now Dyneema Fiber is able to -- is enabling fabric to have improved durability and better performance. In fact, just adding 5% of Dyneema Fiber to cotton doubles its tear strength in the resulting plan. So together with improved tensile strength and abrasion resistance, you have a longer-lasting garment. And which is very key to users of active footwear in demanding conditions. Now it's also something that our customers like Levis actually highlight on their product marketing calling Dyneema out by name. So the end result is a reliable, long-lasting piece of garment that requires fewer replacements and precious resource and energy savings. Now in the instance of where Inks is used to be decorate clothings when you end on a logo or -- a logo or a number for the case of jerseys. It draws another sustainability challenge for today, energy consumption because it takes a lot of heat to properly cure the ink to ensure that you can maximize it long-lasting active wear and also the countless washing cycles. Now the heating and curing process takes up a lot of energy that puts resources and add on significant cost for manufacturers in our solution, solve this challenge as well. We have developed a Low Cure screen printing ink that uses less energy compared to the traditional inks. Now the traditional ink to cure, we would need to heat the oven up to 330 degrees Fahrenheit. Our newly developed Low Cure reduces the temperature requirement by 65 degrees that translate to lower energy consumption. Again, cost and sustainability benefit for everyone. Now the brand owners are also pushing for incorporation of bio-based materials. Now we do use bio-based raw materials in our water-based inks. And that enables preservation of precious resources and at the same time minimizing our carbon footprint. So once again, helping our customers to achieve their sustainability goals and also the consumer proof of bio-based offerings. Now as I mentioned earlier, in event, we also view preservation in another context beyond just natural resources. We also work with our customers in the preservation of human life. Now of the many lessons and reminders that COVID has taught us is in one -- basic one is the importance of hygiene, 80% of infectious disease is actually transmitted by contaminated hands after touching unclean surfaces. Our solution solve this problem as well. We actually have a solution that reduces the growth of microbes, bacteria, mold and fungus on surfaces. Our Cesa WithStand antimicrobial additive is actually used in various application ranging from hospital furniture to video game controllers, phone casing and other shared devices as well. Now another threat to human life is mosquito. Yes, you heard me correctly, I said mosquitoes. Now growing out in Malaysia, this is a big deal. We're taught from young the dangers of mosquito, how to try to eliminate it and also not to have stagnant water lying around because it's a breeding ground for mosquito. Now the reason behind it is that there's 200 million malaria cases that's recorded every year. And nearly half of the world's population is at risk of contracting malaria. And 0.5 million deaths every year is attributed to diseases that are transmitted by mosquitoes. Now this is an ongoing concern, issue and threat. But yet it is one that you could minimize, reverse and prevent. And one way to do this is with mosquito nets. Now we are proud to partner with IVCC to develop our Cesa Fiber anti-mosquito additive that enables the production of durable and efficient mosquito nets. Now IVCC is a Bill & Melinda Gates Foundation funded organization with a single mission of creating innovative solutions to prevent the transmission of insect-borne diseases. Now we do have joint research and production initiatives underway with them. Now our solution protects those that are in the net and ultimately killing the mosquitoes. Now here's another concerning statistics. There's 1 million workplace injury that's recorded every day globally, 1 million every day. And a very common, if not the most common workplace injury is cuts and lacerations to the hands and arms. Now in U.S. alone, there's 300,000 cuts and lacerations that were recorded, which are costing businesses and estimate at $740 million and 70% of those injuries could have been avoided if the workers wore protective gloves. And a lot of times, workers remove their gloves because it limits their movement and the comfort for them to do their job. So hand protection starts with selecting the right material for cut resistance gloves. And gloves made with Dyneema provides all day wear comfort and also delivers unparallel cut resistance. Now moving from protecting workers in the manufacturing environment to protection of our law enforcement agencies and military personnel. Now they are constantly exposed to dangerous situations and body armament with Dyneema is protecting them and we are proud to do so. Now the stakes are high. So is the performance requirements. There's a need for maximum protection and maximum mobility, you really need both. So body aramid with Dyneema is 35% lighter than Kevlar, a lightweight body armor that offers protection, enables the military personnel and law enforcement officer to perform their duty in a more effective manner, less or take more precision and more freedom to focus on the path at hand. Now same applies to rescue operation. There's no margin for error. When you're working in extreme conditions and different climates, safety is paramount. Reliability is not negotiable, entered the Ropes made with Dyneema to the rescue literally. Now the Dyneema Fiber has been carefully engineered to overcome the weakness of generic fiber. This means 4x the fatigue resistance and up to 4x grip resistance. And in all that allows the Dyneema Ropes to be not only safe for human rescue operations, but also for transportation. Now let's go deeper into medical. Now the health care industry is not immune to the sustainability challenges of the other industry. But it is an extremely challenging situation for health care because 90% of medical device waste is from disposable single-use components. And I'll also point out the biohazard concerns of used components within the health care industry remains the main challenge for recycling. As such, the incorporation of bio-based materials or recycled material from other applications is more of a natural cost of focus for the industry. And our solutions is used in various type of devices from ranging from drug delivery devices to biopharmaceutical tubing. Now one example is our Versaflex HC Bio which is a more sustainable alternative for biopharmaceutical tubing. This [ grade ] has been developed to meet critical performance requirements of weldability, kink resistance and having better tensile strength. This bio derived rate is also offering 25% less product carbon footprint compared to thermoplastic elastomers of other grades. Now we have also developed a non-phthalate grade that actually has better thermal properties where it minimizes humidity and condensation in the tube. Now the grades all complies to FDA and USP Class VI requirements. Still within the health care industry. Now one thing that strikes us when we walk into a medical facility is the smell. It's the smell that we would relate to as a clean and safe environment. Now the smell is actually originating from the disinfecting solution that's used for regular and constant cleaning of the facility and also medical devices. Now as at home health care devices continue to rise, clean -- the users are actually cleaning it themselves. Now this is critical. But at the same time, the strong disinfecting solution actually will weaken the plastic casing and eventually would be grade and crack it. We have developed a greater chemical resist solution, our Trilliant HC which actually withstand the constant frequent cleaning with disinfecting solutions and ultimately extending the life of the device. Now the health care industry definitely has a lot of stringent regulatory requirements, and we have continued to invest heavily into our manufacturing capabilities to meet those requirements. And right now, we have 5 manufacturing sites across the regions that complies to the health care manufacturing standard of ISO 1345. And our Mevopur range of Colorants and Additives are manufactured at those sites and to meet the stringent health care standards. And our Mevopur range is also available as a bio-based formulation. Now this brings me to the final end market that I wanted to highlight today, 5G. Now this powerful technology is an enabler to sustainability of everything that you heard today. It plays a role in reducing, renewing and preserving. Now many know 5G as just simply because of the speed. It's really about the connectivity. It's going to enable remote access unlike the world has seen. It's now powering the development of smart cities, remote surgeries, development of autonomous driving vehicles. And in some instances, eliminating the need to travel all together, again, preserving important resources. Now funding has been flowing in to build up this infrastructure. Now China being an early adopter now has 2.8 million 5G base stations. Now in U.S. as Walter mentioned earlier, the $42 billion funding from the BIC program will greatly accelerate the deployment and development of 5G domestically and even is poised to take advantage of the growth. Now our acquisition of Fiber Line in 2019 actually has expanded our solutions into the fiber optic cable industry selling 4G and 5G opportunities. Now the fiber optic cable is a critical conduit that carries data at high speed between the antennas, base stations and the buildings and our solutions developed for the cables are Fiber Line and ECCOH. And our ECCOH solution protects the [indiscernible] optical fiber, ensuring that minimizing -- minimal toxicity and maximum flame retardancy in case of a fire. So it's really low smoke and halogen free. In terms of Fiber Line, our solution prevents water ingress to the optical fiber, again ensuring its longevity and ensuring data quality. Now there's also other critical components in the 5G tower. That's the base station and the antenna. Now our Edgetek Solution, which has excellent [indiscernible] width ratio and resistance to outdoor weather. So -- the 5G parts produced using our Edgetek Solution has good dimension stability because of the ease of processability. And I mentioned about antennas. Now as you can imagine, the high-speed transmission that's required, so the antenna has to be able to handle that, and we have developed a solution PREPERM that allows efficient signal transmission but having minimal data loss. And PREPERM is also lighter in weight and uses less energy to manufacture and fabricate compared to the incumbent ceramic solution, which, by the way, is also more expensive. Simply put, as 5G grow, so will Avient. Now our solutions in Preserve and also protect natural resources and human life touches a lot of end markets and applications. But our end markets are all well aligned with the megatrends, which has end markets, expected to grow over GDP significantly. And as you can see, an aging population combined with the need for at home health care devices will drive the need for medical plastics and the need to connect the world and to enable sustainability, efficiency, there's going to be a huge deployment of capital for 5G build-out. And again, we are ready for this. Our solutions portfolio and customer relationship are very well aligned, and we are excited to put both to work and to grow over the next few years. And thank you for your attention. Up next, Jamie will rejoin us for some additional thoughts and summary before the Q&A session. [Presentation]

People learning about Avient for the first time are always amazed about the breadth of our applications, the vast number of customers we help and the diverse end markets that we serve. Our goal today was to give you a first-hand view of what that looks like for a sustainable solutions portfolio. But sustainability day would not be complete if we didn't mention the great work on all facets of ESG that we do. As Walter mentioned earlier today, we have recently updated our interactive sustainability report that highlights the four cornerstones of our sustainability strategy, which are people, products, planet and performance. It's a robust document that truly does capture the essence of who we are and how we think about sustainability in all that we do. Included in this report is the progress that we've made towards our 2030 sustainability goals. We have specific targets to reduce greenhouse gas emissions, source renewable energy and enable all of our consumer packaging applications to be recyclable, just to name a few. I'm really happy with the progress that we've made to date, and we're on track to meet these aggressive goals by 2030. You can read more by going to avient.com. Our report is also used heavily by rating agencies such as Sustainalytics, ISS and EcoVadis to assess our goals and our efforts. As you can see from the top half of this slide, we continue to rank in the top percentile against our peers in this area. We've also garnered external recognition from third-party forms with a words like Barron's most sustainable companies and USA Today's climate leaders. I'm extremely proud of the progress that we've made to date, as I mentioned before, as well as all of the internal initiatives that will continue our internal sustainability strategy. The awards and recognitions don't stop with our internal ESG posture. Many of the tools and technologies that the presidents highlighted today have also won innovation awards from organizations such as the Plastics Industry Association and the U.S. Plastics Pact. These include services that ease and predict the coloring of post-consumer content, solutions for low-carbon footprint materials and additives that enable recycling. All of these awards and recognitions are further validation that Avient Solutions are making a positive difference in the world and for our customers, and we intend to keep the momentum going. Sustainability is here to stay. Stakeholders are driving demand for sustainable products from sustainable companies. Consumers are demanding it. Governments are mandating it and brand owners, our customers are setting goals to achieve it. They need material science and formulation expertise to do so and Avient provides both. Each of the presidents today summarized the key market trends underpinning our growth assumptions of 8% to 12% in this exciting area. For new, the primary driver will be increasing the use of recycled content. And as we've shown, third-party projections, so recycled feedstocks growing 12% through 2030. For Reduce, not only is it about lightweighting, but it's also about increasing the availability of alternative energy sources such as offshore wind installations and the growth in medical plastics to support an aging population also represent an opportunity for further growth. So whether it's increasing the use of recycled content, reducing weight to lower fuel consumption, using fewer natural resources or protecting human life, Avient has a solution. Our sales last year were just shy of $1.2 billion and the growth in this portfolio ultimately makes a planet -- our planet a better place for all. Avient is well positioned. From an ESG standpoint, our house is clean and we intend to keep it that way. We also have one of the most comprehensive materials portfolios in this space. And we've built this by investing heavily in innovation to enable our customer sustainability efforts. As a reminder, over 85% of our technical research is dedicated towards this space. The growth of sustainable solutions will play a meaningful role in expanding our EBITDA margins to 20% on a total company basis. As you can see from this slide, we've come a long way from the start of our transformational journey. And we can get to 20% EBITDA margins organically as the contribution margin from sustainable solutions, composites and health care is higher than the contribution margin than the rest of our business. M&A is also on the table since we want to expand the breadth of our technologies, not only in sustainable solutions, but also in composites. The most important ingredient of our success though is our people and the culture that we've intentionally created from world-class safety, to being a diverse and inclusive workplace, to giving back to the community. These are just a few things that make Avient special. We're certified a great place to work, and we thrive on being better together. So as we wrap up the presentation today, it's been our pleasure to showcase the many applications that help create a more sustainable planet. It's something that we all want and need. For Avient. I hope you're also taking away that this is a huge growth opportunity for us to deliver top line growth and bottom line profitability for years to come. Our strategic objectives are clear: grow the business, improve profitability, be valued as a formulator and continue to be an amazing place to work. So with that, I'm going to turn the conversation over to Bob for some closing remarks.

Well, thank you, Jamie. We covered a lot of material today, and so I intend to keep my closing remarks brief. I just want to remind everyone that our 4-pillar strategy remains as do the core and personal values shown here, which do underpin what it means to be a great place to work. And Jamie cited that in her closing remarks about how important that is for us and how it's a differentiator. And I would just add as a point of emphasis, I believe that our culture is our superpower. And I want to thank the members of my leadership team for their presentations today, but more importantly, for how they lead every day. I don't know how many companies can look back over the last 4 years and have reported improving employee engagement survey scores, but we can. And I do believe that is a testament to our culture. We changed our name to Avient 3 years ago as a way to welcome the Clariant associates to our new family, and as a way of recognizing the opportunity we had to bring 2 world leaders together and create something even better, and I believe we have done just that. We find ourselves in a similar situation this last year recognizing and bringing Dyneema into the family and as well as the world's strongest fiber into our portfolio. Avient has its roots in the French word, love and [indiscernible], which means future and V, which means life. And I couldn't think of a better description for how we feel about our great company and the growth prospects ahead of us as a specialty formulator of sustainable solutions. Jamie and I will now take any questions that you may have. We'll start with those submitted through the operator. And if time permits, we can take questions submitted by chat as well. Thank you.

Ladies and gentlemen [Operator Instructions] Now first question coming from the line of Michael Sison with Wells Fargo. Michael Sison from Wells Fargo, please check your mute button. Our next question coming from the line of David Huang with Deutsche Bank.

First question, I guess, just given the various opportunities you highlighted and there are different growth profiles. Do you expect any changes in your end market towards geographic exposures in the next few years with these sustainable focus opportunities?

I think that we're really well positioned geographically to support growth in all the regions. I would certainly say that companies are thinking about their geographic position in Asia and specifically China most recently as there has been some reshoring of business back to North America, but we think we're well positioned in all and really to serve all the end markets that we have, including sustainable solutions. So I don't really see a change in our geographic footprint as a result of anything that we've presented today.

From a European perspective, I know Michael talked about this today, and we look at what the opportunity presents. We do feel like they're further along in their sustainability journey. They have a large advocacy -- consumer advocacy and a lot more legislation in play. So as we look at future growth, we think that's going to be an area of more growth. We think the other regions will catch up, too, but Europe is definitely further along.

Okay. Got it. And then second one, do you expect any cannibalization, I guess, particularly on the color additives side as you grow out more of these sustainable products.

Yes. One of the things that we've recognized with the changes in our portfolio with Distribution being exited and Dyneema coming in, you'll see that our growth drivers were modified slightly in the other categories to 0% to 2%. Part of that relates to just the dynamic with global GDP. The other piece, as I mentioned before, is Distribution being removed from our projections and then the recognition that there could be some displacement in some of our existing applications, and we've incorporated that in our long-term growth projections of 6%.

And our next question coming from the line of Frank Mitsch with Fermium Research.

Good morning, everybody. Bob, let me proactively apologize for the Scarlet Knights beat down -- coming beat down of the Wolverine on this coming Saturday. I wanted to get that out of the way. Jamie, you mentioned that people are often surprised that the breadth of Avient and the numerous applications and the numerous customers, et cetera. You presented a very large number of applications here today. I'm wondering about the investments necessary to generate the sort of sales and profits that you've been talking about, how do you -- how are you performing in terms of the investments and the payback that you're realizing in the sustainable solutions area?

Yes. We only were able to cover about half of our sustainability -- our sustainable solutions portfolio today. And as Michael said before, we could probably spend all day going through all those different areas. One of the things I'd like to mention is that we do have a very comprehensive materials portfolio today, and we have solutions today to grow faster. We're really limited by the amount of recycled content that's out there for our brand owners and for other customers, so that's a piece of it. So the other dynamic is that we are investing heavily into this space. I mentioned before, 85% of our innovation pipeline is dedicated to coming up with solutions that [Technical Difficulty] further -- cycling -- further enable increasing recycled content and lightweighting solutions and so on. So from our standpoint, there's been no change in how we've been [Technical Difficulty] historically investing either on R&D spend or CapEx. We feel that's been incorporated today. We don't see any substantial additional investment in this regard.

I see. Okay. And if I could follow up on Dyneema really compelling applications that were highlighted, particularly, I guess, in enable area with mooring lines and towing lines and so forth. I'm curious if there's any way that you can frame where Dyneema stands in the market today in these sort of applications, in terms of market shares and what your trajectory is? And if there's any way that you can talk about the relative cost to use Dyneema versus the current ropes that are used in mooring lines and towing lines?.

Sure. Look, there's no doubt that Dyneema is the premium brand in the industry. And when you look at all different types of fibers that are available, their market share is small. But when we look at what it is on a performance basis, we obviously think it's the best. And so I think it really comes down to the customer and the performance requirements they have where failure isn't an option. We really outlined a lot of those performance characteristics today. And in many of those cases, if you just think about the installation of an offshore windmill, for example, that simply cannot fail, and I really don't see that moving to a lower price or a lower performing product simply because of those performance characteristics.

Any way to talk about what inning we are in terms of Dyneema's ability to expand market share in these applications I mean, are we still on the early side of things? Or where are we on that life cycle?

Yes. I mean I think that, first of all, I mean, Dyneema was a great business before it was part of Avient. And so they have a long track record of growth and expansion into these various end markets. When I look at one of the examples that Chris presented around aquaculture, for example, I think we are very well positioned there and expanding share where they're looking at that from a performance standpoint. Same is true in human health and safety when you look at what we're doing for personal protection. One of the things that we heard is really a positive reaction from the defense industry was that they appreciated that Dyneema was now part of a U.S.-based company, which I think does open up some doors for us, Frank, that may not have been previously available. So I look at those as really good opportunities to expand share. And then maybe finally on that subject, when I just think about the opportunities for cross-selling and you look at Dyneema's presence in the defense industry, I think there's a lot more that we could be doing there with other Avient applications.

And our next question coming from the line of Michael Sison with Wells Fargo. One moment for our next question. Our next question comes from Kristen Owen with Oppenheimer.

I appreciate the additional context for so many of these categories. My first question sort of dovetails on Frank's discussion around Dyneema and appreciate that, that's been integrated into each of these categories with the presentation today. But double-clicking on that business, I wanted to ask if we were to compare the growth rates or target addressable market for Avient from, say, 2021 Investor Presentation today, how has Dyneema expanded that opportunity set for you and thinking about some of the applications that you shared with us, such as integration in cotton or something that might be new to the Dyneema market opportunity?

Yes. So from a Dyneema standpoint, when we integrated them, they have a lot of applications, about half of their business is in defense today. And we've always said that, that's more of a mid-single digit projection. So if you look at the growth drivers, you've noticed that the composites portfolio went from 10% to -- 8% to 10% to accommodate that. We think in the short term, Kristen, though, that defense is going to be a tailwind based on current political -- geopolitical conditions. But to some of the information that Chris presented today in marine infrastructure and in consumer, there's a lot more runway to go, especially on the consumer side. That is something that we think Dyneema just scratched the surface on in particular. It's something that Avient does really well. And I think the connections with our customers and inroads into key OEMs in that space is really going to be able to grow that even further. Hopefully, that answers a little bit of your question.

Yes. That's really helpful. And then if we sort of roll this up into the total 8% to 12% growth framework for this category, just help us understand how you think about pricing or maybe if it's mix improvement in that context?

I mean I think that the sustainable solutions category in general brings with it a higher contribution margin than the balance of the portfolio. Jamie made that observation in one of our closing slides, as we look at ultimately getting to 20% EBITDA margins, a lot of that is driven by mix and growth in those areas, we think that 50 to 100 basis points of improvement per year is a good way to think about that mix improvement. So I mean, hopefully, that helps to answer that. And certainly, the Dyneema portfolio adds to that when you just look at its historical margins.

Next question coming from the line of Mike Harrison with Seaport Research.

As it turns out, if you want to just send your questions to Joe, he can read them for us just to make sure we get a chance to address those.

Bob, I was able to get Mike Sison's question here, so I can read it to you. .

Yes, great. Thanks.

All right. So Mike was asking if we thought about vertically integrating into recycled polymers via acquisition or organically. We said we aren't able to get enough recycled resin, so why not try to fill that gap ourselves.

Yes. Look, one of the important things, I think, that Jamie covered today was just a reiteration of who we are. We are a formulator, we're not a base-resin manufacturer. And so when I look at recycled content, I view that as just another feed stream, if you will for resin. So we don't think it's our strength to backward integrate into that. We do think it makes a lot of sense to partner with those who are, particularly with respect to innovation and ensuring that we're able to enable those solutions going forward. . Ultimately, we are really agnostic with respect to the materials that our customers select. We just want to be able to support them in whatever they choose. Other companies may have a different approach to that. And clearly, some of the major players out there that are base-resin manufacturers may be looking at rightly so at making investments into increasing the amount of recycled content that they generate themselves, but that's not what we plan to do.

Okay. And then we have another question from an online chat. How do you assess whether customer goals and legislative mandates are realistic and/or that the consumer behavior derived from the surveys is sustainable through the economic cycle. What risks to Avient's growth targets exist if some of the demand, data assumptions provided today wind up not playing out on schedule.

I think you've seen from projections that we've historically give with Avient that we tend to be pretty conservative. A lot of the market data that the presidents talked about and Walter talked about, we're actually in excess of this 8% to 12% dynamic that we have. And we do think there's some challenges with regards to sustainable solutions, one that we keep highlighting is that there's just not enough recycled content that's out there. And we think there's a great opportunity to increase the use of recycled content. A lot of the legislation that's out there, a lot of the consumer demands in this regard, they want that. And I think that's going to be the barrier, and we've incorporated that into the range that we provided to 8% to 12%.

And I think when we look at the brand owner commitments and where they are with respect to meeting those, we covered that today that obviously there isn't enough recycled content right now to perhaps hit those on the time lines they projected. But I do think that they're going to get there. And I think that's really important. Ultimately, we will have enough recycled content. They will hit those goals. And I think as we have said all along, to the extent that recycled content becomes more readily available, that only helps our growth rate and helps us to get to our goals faster.

Okay. It looks like we have one more question. Does consumer shifting to off brands or generic brands affect your sales?

It's interesting when I kind of reflect back on the great recession of '08 and '09, that was a conversation at that time when you would see people moving from maybe name brands or brand owners to store brands, really as a part of being in a recession. I think that can happen and is taking place to some extent today. But when I look at one of the slides we presented with respect to brand owners and brand owner commitments, one of the names that we had on there was Walmart, obviously, a major retailer, a low-cost provider of materials, and they have their own sustainability goals. So even though someone might be focused on a lower cost option or moving towards one that is a store brand, I don't think that, that means less in the way of sustainability because of those particular retailer's commitment to sustainability as well.

Bob and I were just talking about an example. I traveled to Costco frequently, especially with my 2 teenage kids that eat a lot. And I was looking for our favorite mixed nuts packaging. And typically, it's in this rigid, clear container that has paper labelings on it. And this is last weekend, that packaging changed. It actually is now in flexible packaging that is colored. So plastic coloring and advertised very distinctly on there was 85% reduced plastic. So even these store brands or generic brands are not immune from customer preference or legislative measures that are demanding the increase of recycled content and they're responding. And this is like another example of where Avient comes to play and that resulted in color for the business.

Thank you. I understand that was the last question that was submitted in the chat function. Obviously, we're always available to answer questions as they come up where you've had a chance to further think about the materials that we presented today. Again, we just thank you for your time and attention and the ability to share more with you about our sustainable solutions portfolio. Thank you.

Thank you. .