Avient (NYSE:AVNT) reported fourth-quarter and full-year 2025 results that management said reflected favorable product mix, disciplined cost control, and continued momentum in select end markets such as defense, healthcare, and telecommunications. Executives also outlined a 2026 outlook that assumes improving demand in some historically weaker markets, while acknowledging ongoing macro volatility tied to trade policies, geopolitics, and shifting supply chains.
Fourth-quarter results: margin expansion despite slightly lower organic sales
Chairman, President, and CEO Dr. Ashish K. Khandpur said fourth-quarter execution and cost control helped deliver 80 basis points of adjusted EBITDA margin expansion and 14% adjusted EPS growth. Organic sales declined 0.8% in the quarter, though sales grew 1.9% as reported due to favorable foreign exchange.
Full-year 2025: record adjusted margins and debt reduction
For the full year, management said sales were “relatively flat” year-over-year, while mix and productivity initiatives drove 50 basis points of adjusted EBITDA margin expansion to a record 16.7%. Adjusted EBITDA was $545 million, up 3.5% year-over-year as reported, while adjusted EPS increased 6% aided by lower interest expense and favorable foreign currency movements.
Khandpur said disciplined cash management generated $195 million of free cash flow, enabling Avient to reduce outstanding debt by $150 million and finish 2025 with net leverage of 2.6x. He also noted the company’s strategy shift beginning in 2024 to prioritize organic growth, complemented by targeted M&A, while sharpening focus on profitability.
Over the past two years, Khandpur said Avient grew adjusted EPS by about 20%, expanded adjusted EBITDA margins by 70 basis points (20 bps in 2024 and 50 bps in 2025), improved ROIC by 90 basis points versus 2023, and reduced net leverage from 3.1x in 2023 to 2.6x in 2025.
Segment and regional performance: defense and healthcare offset weaker markets
Senior Vice President and CFO Jamie Beggs said Avient’s Color, Additives and Inks (CAI) segment saw 3% organic sales decline in the fourth quarter. Strength in healthcare and improved packaging demand was offset by weaker conditions in consumer, industrial, and building and construction. CAI EBITDA margins declined 10 basis points, with productivity initiatives mitigating inflation and lower demand.
In Specialty Engineered Materials (SEM), Beggs reported 3% organic sales growth in the quarter, as defense, healthcare, and telecom gains more than offset declines in energy, industrial, and building and construction. Favorable mix and productivity supported 80 basis points of margin expansion, contributing to 10% EBITDA growth alongside higher demand and positive FX.
Regionally in the fourth quarter:
- U.S.-Canada sales declined 1%, improving from a 5% year-over-year decline in the prior quarter, with packaging growth helping offset weakness in industrial, building and construction, and energy.
- EMEA was described as slightly better than the third quarter, when organic sales declined 2% year-over-year, helped by consumer appliances growth and continued defense and healthcare momentum.
- Asia grew 3%, driven by packaging and telecom, with management citing opportunities tied to high-performance computing.
- Latin America declined 5%, attributed to softer consumer demand and a tough comparison after 14% growth in the prior-year quarter.
For the full year, Beggs said CAI organic sales declined 2%, while SEM organic sales grew 2%. CAI margins expanded 50 basis points on mix and productivity tied to plant footprint optimization and organizational streamlining. SEM margins declined 40 basis points, reflecting planned maintenance completed in the second quarter within Avient Protective Materials and strategic investments in growth vectors.
Innovation and capacity: PFAS alternatives and Dyneema debottlenecking
Khandpur emphasized innovation as a key driver of organic growth and profitability. He cited product development aimed at replacing PFAS materials under tighter regulations in the U.S. and Europe, including GlideTech technology for non-PFAS, non-silicone lubricious materials in catheters and a portfolio of non-PFAS polymer processing aids for polyolefin film used in packaging and personal care products.
He also discussed a process innovation designed to unlock additional Dyneema fiber capacity using existing manufacturing equipment. While declining to disclose details due to trade secrets, Khandpur said the work enables production of tailored material properties without materially slowing production rates, helping the company “buy time” before new capacity comes online.
Management pointed to defense growth of 14% in 2024 and 8% in 2025, and said it expects momentum to continue due to announced increases in defense spending, particularly in the U.S. and Europe. Beggs said 2026 capex will increase to support defense-related growth investments, with the company targeting additional capacity coming in 2028.
2026 guidance: cautious optimism with productivity as a backstop
For 2026, Avient guided to adjusted EBITDA of $555 million to $585 million (up 2% to 7% year-over-year) and adjusted EPS of $2.93 to $3.17 (up 4% to 12%). The range includes a first-quarter adjusted EPS outlook of $0.81.
Beggs said the outlook balances “encouraging demand trends” with continued uncertainty related to global trade, labor markets, GDP growth, and foreign currency. Khandpur added that on the low end of the guidance range, Avient assumes consumer, industrial, and building and construction demand does not improve, while the midpoint assumes modest low-single-digit growth across those markets, with stronger growth at the high end.
Avient also expects free cash flow of $200 million to $220 million in 2026, assuming $140 million of capital expenditures, about $33 million more than 2025, driven primarily by incremental investments to support defense growth.
On capital allocation, Khandpur said Avient expects to prioritize debt reduction in the near term, with no M&A anticipated “in the next 12 months,” and an expectation to end 2026 with net leverage below 2.5x. He said additional flexibility for buybacks and M&A would likely come after further balance sheet improvement.
About Avient (NYSE:AVNT)
Avient Corporation (NYSE: AVNT) is a global provider of specialized and sustainable polymer materials, delivering color, additive and engineered solutions to a wide range of industries. The company’s core offerings include masterbatches, colorant systems, compounds and resins designed to enhance performance, aesthetics and environmental sustainability. Avient serves markets such as packaging, automotive, consumer goods, healthcare, electronics, and agriculture, tailoring products to meet stringent regulatory and end-use requirements.
Formed through a corporate rebranding in 2020 following the divestiture of PolyOne’s specialty businesses, Avient traces its heritage to a legacy of polymer innovation spanning decades.
